Pakistan: The Impact of Economic Liberalisation on Poverty

The reform program that Pakistan gradually implemented during the 1980s and the early 1990s dismantled many of the components of the ISI strategy.1 The extent of dependence on quantitative import controls was sharply curtailed. The exchange rate became increasingly determined by market forces and tariff rates were reduced. The discrimination against exports, relative to import substitutes, was reduced. There was also a sharp reduction in restrictions to which foreign direct investment had been subjected to in the past. The reform of trade and foreign investment was of course accompanied by many other reforms. Notably, there was a general reduction of direct regulation of prices; a greater dependence on the market for resource allocation; and a reduction in the public ownership of the means of production in favour of the private sector, via denationalization and privatization of manufacturing units and banks.