Understanding common terms
| Term | Meaning |
|---|---|
| raw materials | natural materials used to make things (cotton, wheat, sugar cane, minerals) |
| refined | a raw material that has been cleaned or purified (sugar, refined oil, metal) |
| processed | changed by a process (flour from wheat, yarn from cotton, canned fruit) |
| manufactured | made into a finished product (cloth, clothes, machines, cement) |
| value-added | the extra value created at each stage: manufactured goods are worth more than the raw materials (a shirt is worth more than the cotton in it) |
| infrastructure | the basic systems needed by industry: roads, railways, ports, power, water, telecommunications |
| services | non-material help that people pay for: banking, transport, education, health, trade, tourism |
Primary industry: gets raw materials from the land or sea (agriculture, mining, fishing, forestry). Secondary industry: manufactures and processes them (textiles, cement, steel, food processing). Tertiary industry: provides services (banking, transport, retail, tourism, education, health).
Types of industry by size
| Type | Description |
|---|---|
| Large-scale industry | factories with many workers and machinery, registered with the government (cotton textile mills, cement, sugar, fertiliser, steel) |
| Small-scale industry | workshops with few workers and some machinery (such as sports goods, surgical instruments, small engineering shops) |
| Cottage industry | made at home by family members, using simple tools (carpets, embroidery, pottery, handloom weaving) |
(The exact number of workers that separates the sizes depends on the definition used; learn the characteristics.)
Main industries: products and markets
| Industry | Products | Market | Main locations |
|---|---|---|---|
| cotton textiles | yarn, cloth, clothing, towels, bed-linen | domestic and export (the largest export) | Faisalabad, Karachi, Lahore, Multan |
| sugar | sugar | domestic | Punjab, Sindh and Khyber Pakhtunkhwa (near the cane areas) |
| cement | cement | domestic (and export) | near limestone (Potwar, Kohat, Hub) |
| fertiliser | urea, DAP | domestic | near gas fields (Mirpur Mathelo, Multan, Daharki) |
| iron and steel | steel for construction and industry | domestic | Karachi (Pakistan Steel Mills at Pipri) |
| leather | hides, shoes, jackets, gloves | export and domestic | Karachi, Sialkot, Lahore, Kasur |
| sports goods | footballs, hockey sticks, rackets | export | Sialkot |
| surgical instruments | scissors, forceps | export | Sialkot |
| carpets | hand-knotted carpets | export | Lahore, Multan, Peshawar, Karachi |
| food processing | flour, ghee, fruit juices, canned goods | domestic and export | all cities |
More on key industries.
- Sugar mills must be near the cane: cane starts to lose its sugar soon after cutting and is bulky and costly to carry. By-products: bagasse (fuel, paper and board, animal feed) and molasses (alcohol and chemicals).
- Fertiliser: natural gas is the main raw material; the largest plants are in the gas areas (Daharki, Multan, Mirpur Mathelo, Haripur). Nitrogenous fertiliser (urea) is used most because most soils lack nitrogen.
- Cement: needs limestone and gypsum, gas or coal for fuel, and a big home market (construction).
- Steel: Pakistan Steel Mills at Pipri, near Port Qasim (built with Soviet help, started in the 1970s), is the main steel plant; the Heavy Mechanical Complex at Taxila (built with Chinese help, late 1970s) makes machinery, boilers and railway equipment.
- Textiles are the largest industry, providing a large share of exports, jobs and industrial output (more than half of exports).
- History: after 1947 private business was slow to invest in heavy industry, so the Pakistan Industrial Development Corporation (PIDC) set up factories (textiles, fertiliser, cement, sugar) and later sold many to private owners. The 1960s saw fast growth in industry.
Factors that influence location and development
- Capital (money to build the factory and machinery);
- site (flat land, cheap land, near the market);
- raw materials (for example cotton mills near cotton-growing areas; cement near limestone; sugar near cane);
- power (electricity and gas);
- water (textiles, leather and fertiliser need a lot);
- labour (a large, skilled and cheap supply, such as in Faisalabad and Sialkot);
- communications (roads, rail, ports such as Karachi for export, and telecommunications);
- government policy (taxes, tax holidays, special zones, and loans);
- market and history (Sialkot has a tradition of metalworking; Karachi has the port and a large market).
The formal and informal sectors
| Formal sector | Informal sector | |
|---|---|---|
| Registered, taxed and regulated? | yes | no (unregistered) |
| Workers | contracts, regular pay, benefits and rights | casual, low pay, no job security or benefits |
| Examples | big factories, banks, large firms | street vendors, small workshops, rickshaw drivers, home workers, domestic servants |
| Contribution | large output and exports, pays tax | employs most workers, supplies many cheap services, fills gaps |
Services of the informal sector: repairs, transport, retail, food stalls, recycling (waste collectors), construction labour, domestic work.
Advantages: it creates jobs, provides cheap goods and services, needs little capital, and trains workers. Disadvantages: poor pay and conditions, no tax is paid, lack of safety and rights, child labour, and low productivity.
Importance of both. The formal sector brings large-scale production, exports and tax; the informal sector gives work to millions and supports the formal sector with parts, repairs and services (and informal home workers supply sports goods and carpets to formal firms).
Capital, labour and government support
- Sources of capital: savings, bank loans (the Industrial Development Bank), the stock market, foreign investment, government funds, and remittances from overseas Pakistanis.
- Sources of labour: the growing population (many young people), migration from rural areas; skilled labour is short.
- How the government promotes industry: tax concessions and tax holidays; cheap loans; import duties on foreign goods; infrastructure (roads, power); industrial estates and export processing zones; training institutions; setting up state corporations (such as Pakistan Steel).
Support for small and cottage industry. Government bodies such as the Small Industries Corporations (in each province) give loans, training, marketing help and cheap premises.
How industry harms the environment and people. Factory waste and sewage pollute rivers, groundwater and the sea (harming fish and mangroves); smoke pollutes the air; dumping spoils land; and noise and chemical waste harm health. The cost of cleaning is often ignored by small firms.
Export processing zones and industrial estates
| Name | Notes |
|---|---|
| Karachi Export Processing Zone (1989) | first EPZ; duty-free imports of raw materials and machinery for export industries |
| Risalpur, Gujranwala, Sialkot (EPZs) and Gwadar (free zone) | the same idea |
| SITE (Sindh Industrial Trading Estate, Karachi); Faisalabad; Gujranwala and other industrial estates | an area with ready-made land, roads, power, water and other services for a group of factories |
Why they were developed: to attract investment, create jobs, increase exports and spread industry. Characteristics: security, utilities, customs facilities and tax concessions.
Services: global communications and tourism
Call centres and global communications
The internet, fibre-optic links and mobile phones allow Pakistan to offer services to foreign companies (call centres, software, data entry, IT, freelancing). Feasible because of a large English-speaking workforce, low wages and the time zone; but problems are unreliable power, slow internet, skills shortage and security.
Tourism: natural and cultural attractions
| Natural | Cultural and historical |
|---|---|
| Swat, Naran–Kaghan, Murree (hill stations), Hunza, Skardu, K2 and the Karakoram (mountaineering), Deosai plains, Saif-ul-Malook | Mohenjo-daro and Harappa (Indus Valley civilisation), Taxila (Buddhist), the Faisal Mosque (Islamabad), Lahore Fort and Badshahi Mosque, Shalimar Gardens, Makli (Thatta), Rohtas Fort, Kalash valleys (Chitral) |
Feasibility of tourism as a means of development. Benefits: jobs, foreign exchange, support for local businesses, more infrastructure, and a better image of the country. Problems: security concerns, poor roads and facilities, few hotels in remote areas, pollution and damage to sites, and climate (floods). With investment and peace, it has great potential for employment, GDP and GNP.
Outline. A long tradition of skilled workers (metalwork and leather) and a ready supply of labour; local small workshops and home workers; export links (and an EPZ, dry port, airport); entrepreneurs and government support. Not near raw materials, so skills and markets matter more.