Impact of Globalization on Pakistan

Essay by santronix July 2010

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Globalization is a process of interaction and integration among the people, companies, and the governments of different nations, a process driven by international trade and investment and aided by information technology. This process has many fold effects. It affects economic development and prosperity, culture, environment, political systems, and human physical well-being in societies around the world.

There are however, controversial opinions and findings on the impact of globalization on a country. Supporters of globalization argue that it allows poor countries and their citizens to develop economically and raise their standards of living, while opponents of globalization claim that the creation of an unregulated international free market has benefited multinational corporations in the Western world at the expense of local enterprises, local cultures, and common people in poor nations.

Since the phenomenon of globalization is controversial and it has influenced various countries in view of their peculiar set of circumstances therefore this paper ventures to analyze its impact on Pakistan's trade, investment, financial and other institutional reforms, human development indicators and situation of technology.

The experience of Pakistan suggests that short-term negative effects outweigh the perceived benefits of globalization and liberalization. Despite intensive trade liberalization, Pakistan's trade performance has been dismal. Growth in imports was faster than the growth in exports with a degree of openness of a degree which was more than required. This is mainly due to the fact that foreign direct investment (FDI), which is a complementary requirement for trade liberalization to be successful for promotion of export, did not increase in consonance with the level of liberalization in Pakistan. This adverse outcome is partly reflection of the fact that the country was asked by the IMF/World Bank to reduce the tariff rates swiftly (particularly in the mid 1990s) before...