how to make pakistan a rich country

HOW TO MAKE

A RICH COUNTRY

How to Make Pakistan A Rich Country

2

• We Need Three Hundred Universities in Pakistan

• Pension for All Old Citizens of Pakistan

• We Need Large Gold Reserves : To Make Rupee A Strong Currency

• We Need Thirteen Stock Exchange Companies

• Development Expenditure : A Failed Concept; A Death Trap

• Defects in the Educational System

CONTENTS


3

WE NEED THREE HUNDRED (300) UNIVERSITIES IN PAKISTAN

CHAPTER 1


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In Pakistan higher education is viewed as a benediction which should be only to chosen few members of society. It is the narrow approach which is perhaps the major obstacle in creation of universities for the masses in Pakistan. In an ideal society, higher education should be accessible to all those who want to improve their lot. For example, a third division master’s degree holder is far more knowledgeable and a useful person to himself and society than a person who has less education, say a first division matriculate. An educated person, by virtue of his knowledge, is able to exploit all available resources such as:

• Employment opportunities • Health facilities • Baking facilities • Dealing with government agencies • Personal resources • Natural Resources

In our present society, every endeavor requires filing of forms, reading and writing skills, simple mathematical calculations and judgments based on knowledge. Comparatively, an under educated person is helpless in coping with demands of life as he lacks the necessary reading, writing and mathematical skills. For example, an educated farmer can extract more output from a farm by applying progressive techniques where as an under educated farmer most likely, will not be able to extract as much output. Role of other institutions of higher learning such as 2‐year, 4‐year colleges, technical college and professional colleges is obviously very important. These institutions of higher learning are an integral part of overall educational system and they are indispensable. However, this Chapter is primarily concerned with Impact of Universities on the Economy. Therefore, presentation in this Chapter is confined to economic impact of universities only. A University must be viewed as a large industrial unit because it has all of the characteristics of an industrial unit. A University qualifies as a large industrial unit because of the following economic characteristics:

1. Product: A service product in the form of educational degree is created having indirect economic value.

2. Gross Domestic Product: A very large value of gross Domestic Product is created. The sum of expenditure incurred of service product (educational degree) is in fact an economically useful GDP.

3. Employment: Universities create employment opportunities for a large number of persons.

In addition a University creates an extra benefit. Universities also Absorb A Very Large Number Of Unemployed Adult Population As Students, Which Diverts Potential Job Seekers Away From the Employment Market Thereby Creating Better Employment prospects For the Remaining Unemployed population. This aspect of institutions of universities is extraordinary and no other industry can match this advantage.

WE NEED THREE HUNDRED (300) UNIVERSITIES IN PAKISTAN

INSTITUTION OF UNIVERSITIES A SERVICE INDUSTRY


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ECONOMIC IMPACT IF THREE HUNDRED (300) UNIVERSITIES ARE CREATED IN PAKISTAN

CREATION OF 300

UNIVERSITIES WILL

Generate direct employment for

300,000

Provide opportunities for higher education to 3,000,000 persons

Generate annual and recurring GDP of

Rupees 75‐Billion Per

Enable emergence of paper printing and publishing

Enable Diversion of potential employment seekers away from the

job market

Enable Absorption of 3,000,000 potential employment seekers as students, this will create better job

prospects for the general

Existence of highly educated population will ensure quick economic development


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Particulars United States of America Pakistan____

Population 265,284,000 135,280,000

Total No. of Universities 606 33

Average Population Served 437,762 3,661,516 by Universities

Total No. Students in All 6, 827, 28 71,819 Universities

Average No. Students per 11,266 2,176 University

Adult Population 192,507,000 72,515,000

%age of Adult Population 3.546 % 0.00099 % Enrolled in Universities

Total No. Persons Employed 886,156 33,000 In Universities

Source of Data: Statistical abstract of USA, college hand book 1997. Economic survey, Govt. of PAK

Not only a large segment of population of Pakistan is deprived of access to university education, but also a large segment of population is deprived of employment opportunities due to absence of universities.

There are 24 administrative divisions in whole Pakistan. Each division has average population of 5.6 Million persons. Establishment of one university in each division will effectively provide opportunities for higher education for a large segment of veil observing women population. In addition employment opportunities for 24,000 women will be generated. All of these economical benefits can be achieve at a petty cost of Rs. 100 Million Per Annum per University, Instead of blasting away 100 Billion Per Annum on wasteful development schemes. This measure will instantly improve economic and social conditions of women of this country.

COMPARISM BETWEEN STATUS OF UNVERSITY EDUCATION OF UNITED STATES OF AMERICA AND PAKISTAN

ONE UNIVERSITY FOR WOMEN IN EACH DIVISION


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A. GROSS DOMESTIC PRODUCT

Recurring (Direct) Gross Rs. 75,000 Millions Domestic Product Per Annum Recurring Gross Domestic Due to Rs. 15,000 Millions Additional Demand for Paper, Printing And Publishing Industries Additional (Indirect) Recurring Rs. 150,000 Millions Gross Domestic Product Due to Multiplier affect Total Recurring Annual GDP Rs. 240,000 Millions

B. EMPLOYMENT Direct Employment Opportunities 300,000 Additional Indirect Employment 41,660 Opportunities Due to Demand for Paper, Printing and Publishing Additional Employment due to 416,666 Multiplier Affect Additional Indirect Employment 3,000,000 Opportunities Due to Absorption of Adult Population as Students Total Employment opportunities 3,758,326

1. Statistical Abstract of USA, 1993, U.S. Bureau of Census, 113th Edition.

2. Economic Survey, 199697, Government of Pakistan, Finance Division, Economic Adviser’s Wing, Islamabad.

3. Economics by William P. Albrecht Jr., Published by Prentice Hall, Englewood Cliff Hew

Jersey, USA 1974.

4. Statistics on Higher Education, University Grant Commission H‐9 Islamabad, Pakistan.

SUMMARY OF ECONMIC IMPACT IF 300 UNIVERSITIES ARE CREATED

BIBLIOGRAPHY


8

PENSION FOR ALL OLD CITIZENS OF PAKISTAN

CHAPTER 2


9

At the present there is no pension scheme for old citizens of Pakistan. The citizens who reach old age have no guaranteed source of income. These old citizens suffer immensely. They loose self respect and become entirely dependent on their close relatives for financial support. This creates financial strain on poor families who can ill afford to sustain their own existence. The suffering is unnecessary and it needs to be alleviated immediately. It can alleviate immediately irrespective of whether a country is poor or wealthy. All that is required is a System for Accumulation of Funds and Disbursement of a Minimum Amount to old citizens. The system must be simple, easy to implement and it should provide a bare minimum level of income to all citizens including housewives. In U.K. it is entitled, Social Insurance and in U.S.A. it is entitled, Social Security Act. We need not experiment afresh and waste valuable time, plenty of models are available. All we need to do is to Copy A Successful Pension System of a successful nation.

Name of Country Title of Pension or Insurance Program Year of Enactment

Germany Sickness Insurance Law 1883

National Workman’s Compensation Act 1889

Britain Workman’s Compensation 1897

Compulsory Health Insurance 1911

Compulsory Old Age & Survivor’s 1925

Insurance

Russia Sickness Insurance Law 1911

Uruguay Old Age Disability & Survivor’s Insurance 1919

Japan Sickness Insurance Law 1922

Chile Sickness, Disability & Survivor’s Insurance 1924

New Zealand Sickness, Maternity, Disability, Accident 1938

Old Age Survivor’s & Unemployment Act

United States of America Social security Act. 1935 Source: Encyclopedia Americana, International Edition by Grolier Incorporated, U.S.A.

PENSION FOR ALL OLD CITIZENS OF PAKISTAN

COMPULSORY PENSION SYSTEMS FOR OLD CITIZENS OF SELECTED COUNTRY AND THE YEAR OF ENACTMENTS


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Industrial development alone can’t eliminate poverty. Therefore enactment of compulsory pension scheme for all old citizens is a pre‐condition for elimination of poverty in Pakistan. It should also be borne in mind that elimination of extreme levels of poverty became possible in western countries only after enactment of compulsory pension schemes in those countries.

ECONOMIC AND SOCIAL BENEFITS OF COMPULSORY PENSION SYSTEM FOR ALL OLD CITIZENS

COMPULSORY PENSION

SYSTEM WILL

Increase spending power of most house‐holds thereby

promoting economic stability

Eliminate the extreme level of poverty which are

prevailing all over Pakistan

Support part of old citizen’s daily expenditure

Increase standard of living and will decrease the gap between the rich and poor

Instill a sense of pride, dignity and self‐respect to

old citizens

Enable old citizens to sustain a minimum standard of living


11

According to 1981 population census, 8.95% of general population is in the age group of 55 and over. The population of Pakistan in the year 1996‐97 is 135 million persons. Thus, total number of old citizens who will be eligible for pension scheme will be as under:

Total number of old citizens = General population Eligible for pension: in 1996‐97 x 8.95% = 135 million x 8.95% = 12.082 million persons And, Total expenditure on pension = 12 M Old x Rs. 200/‐ pension Scheme per month citizens per month = Rs. 2,400 million Total expenditure on pension = Rs. 2,400 million x 12 months Scheme per year = Rs. 28,800 million per annum Estimated Recovery on Amount of Compulsory Deduction of Pension at 1% of Salary Total work force 38.180 million Per Capita income Rs. 4,347.00 Pension Recovery = Average Salary x rate of x work Per worker pension force = Rs. 4347 x 1% x 38.18 M = Rs. 1.659 billion Per Annum = Rs. 1.659 x 12 = Rs. 19.920 billion Short fall of Rs. 8.880 billion per annum, can be met from 1% pension tax on monthly telephone bills Source: Economic Survey, 1997‐98, Govt. of Pakistan

1. Economic Survey, 199697, Government of Pakistan, Finance Division, Economic

Adviser’s Wing, Islamabad.

2. Economics by William P. Albrecht Jr., Published by Prentice Hall, Englewood Cliff Hew Jersey, USA 1974.

CALCULATION OF EXPENDITURE ON OLD AGE PENSION SCHEME

BIBLIOGRAPHY


12

WE NEED LARGE GOLD RESERVES TO MAKE BRUPEE A STRONG CURRENCY

CHAPTER 3


13

Prior to 1971, the Gold Revenue Exchange Standard System was in operation. Under this system each nation defined its currency in terms of specific value of gold. In addition each nation agreed to convert its paper currency into gold on demand. Under this system, large reserves of gold were maintained by central banks to support value of their respective currencies and to meet international obligations arising due to trade deficit. The Gold Exchange Standard System had some inherent flaws due to scarcity of gold which prohibited expansion of money supply. And as such money supply could not expand in proportion to requirement of trade. It was felt that Gold Exchange Standard System was no longer adequate to meet the demands for expansion of trade and demand for expansion of money supply. On August 15, 1971, United States of America announced that it would no longer redeem paper dollars for gold. Other nations also followed and dispensed with Gold Exchange Standard System. Currencies were left free to be traded in the open market to find their own price level.

Gold has been universally accepted and valuable community since time immortal. It continues to be a valuable commodity today. It has a predictable and universally accepted value and it can be converted into any currency because it is acceptable and valuable to all peoples of world. Value of gold increased with the passage of time. Its value has a tone of stability because of scarcity of supply. Because of its universally accepted value, scarcity of supply, stability in its value, gradual and predictable increase in its value with the passage of time, the gold continue to be significant component of Reserve Assets of developed nations. Gold imparts a predictable value to the currency it backs. In simpler terms large gold reserve increase the value of currency in domestic and international markets. Compared to even the most sought‐after countries, the US dollar, the Gold is universally more acceptable, stable in value, with constant rise in its price. Therefore Gold must be recognized as the most important of Reserve Assets.

Quantity of Gold Value of Gold Name of Country (in millions of troy ounces) (in billions of dollars) United States of America 264.320 92.512 Germany 95.180 33.313 Switzerland 83.280 29.148 France 81.850 28.647 Italy 66.670 23.335 Netherlands 43.940 15.379 Venezuela 11.460 4.011 Pakistan 2.265 0.793 Source of Data: Encyclopedia of Banking and Finance, by Glenn G. Nunn, F.L. Garcia, Charles J. Woelfel,

Published by Banker’s Publishing Co., Rolling Meadows. Illinois, USA and Economic Survey 1995‐96, Govt. of Pakistan.

WE NEED LARGE GOLD RESERVES TO MAKE RUPEE A STRONG CURRENCY

VALUE OF GOLD

QUANTITIES OF GOLD HELD AS RESERVE ASSET BY DEVELOPED NATIONS OF WORLD


14

The table reveals direct relationship between strong currency and large quantities of gold held as Reserves. All of above countries have strong currencies having high trading value in the international markets except Venezuela and Pakistan. High value of currencies of above countries is well known and the prices are published daily in newspapers. The important point to note is that all of the developed countries are maintaining very large quantities of gold as reserves, which has imparted very strong value to their currencies in the international markets. And strong currencies have advantage over weak currencies in international trade because less domestic currency is required for imports from other nations.

Quantity of Gold Percentage of In millions of Total World

Ounce Reserve Held Total Gold Reserves of All Countries of World 946.200 100.00% Developed Countries 783.600 82.82% Underdeveloped Countries 162.600 17.18%

Source: Encyclopedia of Banking and Finance by Glenn G. Munn, F.L. Garcia, Charles J. Woelfel published by Banker’s Publishing Co. Rolling Meadow, Illinois U.S.A.

The Exhibit reveals that total Developed Countries have very strong currencies. Thus it can be concluded without any reservation that holding of large quantities of Gold Reserves is a major factor which significantly contributes to high value of currencies of developed countries in the international trading market.

Geographical size of Land Area of 803,943 Sq. km Pakistan in percentage of Pakistan = = 8.78% of size of U.S.A. Land area of 9,169,454 Sq. km U.S.A. Population of Pakistan Population of Pak. 135 million in percentage of = = 50.94% population of U.S.A. Population of U.S.A. 265 million Mean of both percentage (8.78% + 50.94%)/2 = 29.85%

TOTAL QUANTITY OF GOLD HELD AS RESERVE ASSET BY DEVELOPED AND UNDERDEVELOPED COUNTRIES

CALCULATION OF REQUIRED QUANTITY OF GOLD RESERVES FOR PAKISTAN


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Calculation of required Gold Reserve of x Mean of both percentage U.S.A. Gold Reserves of Pakistan 264.320 million x 29.85% = 78.925 million Ounce troy ounce Value of Required Gold At price of 350.00 x 78.925 M = 27.624 B Reserves in U.S. dollars dollars per ounce ounce dollars



3. Encyclopedia of Banking and Finance by Glenn G. Munn, F.L. Garcia, Charles J. Woelfel

published by Banker’s publishing Co. Rolling Meadow, Illinois U.S.A.

4. Statistical Bulletin, State Bank of Pakistan, June 1995.

BIBLIOGRAPHY


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WE NEED THIRTEEN STOCK EXCHANGE COMPANIES

CHAPTER 4


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Creation of additional Stock Exchanges in major population centers of Pakistan will provide opportunity for residents of these areas to invest their idle savings in the shares of companies. A vast amount of Investment Capital will be available for investment in the industry. It can safely be estimated with reasonable accuracy that an additional Investment Capital amounting to Rs. 1460.064 billion will be available. That country has potential for Public Limited Companies in the range of 5000 to 7000 companies. It is beyond the managerial capacity of existing Stock Exchanges to accommodate such a large number of companies. This is evident from the fact that small investor has been banned from buying and selling of shares through stock exchanges of Pakistan. Obviously the Stock Exchanges of Pakistan are not in need of additional business of buying and selling of shares. They are already making too much money! Therefore, if the country is to become an industrialized nation, then at least ten (10) additional stock exchanges will be required.

Additional Stock Exchanges are immediately needed in the following major cities of Pakistan:

• Gujranwala • Faisalabad • Sargodha • Multan • Sukkar • Hyderabad • Quetta • Peshawar • Azad Kashmir • Federal Administrated Tribal Areas

Creation of Additional Stock Exchanges will enable additional one hundred (100) million citizens of Pakistan to invest their idle savings in shares of companies. At the present citizens living in the above population centers are completely cut‐off from the activity of buying and selling shares of companies. There is no justification why only one, two or three Stock Exchanges should be operating? No expenditure of Government is involved and there is no divine law which prohibits more Stock Exchanges. Therefore there exists no justification for not having additional Stock Exchanges in the above cities of Pakistan. It is important to borne in mind that cost of establishment of additional Stock Exchanges will be incurred by the private sector.

ADDITIONAL STOCK EXCHANGES REQUIRED

POPULATION AREAS WHERE ADDITIONAL STOCK EXCHANGES ARE REQUIRED


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Name of City Population in Million Karachi 7.503 Lahore 4.890 Islamabad 0.470 Total 12.863 9.525% of total Population of Pakistan Total population of Pakistan 135.000

Resident of other cities of Pakistan also invest in shares of companies to a smaller extend but their participation is limited only to investment in initial floatation of shares. In order to test the hypothesis that only ten percent (10%) of potential source of Investment Capital is being tapped, a random sample of 166 certificates of 10023 shares of 37 companies was examined. The certificates were selected on the basis of availability on hand on a certain date which was in personal custody. Data on geographical location of original allot tees of share certificates was collected. The results of sample survey are summarized below: Geographical Number of Shares Percentage of Location of Allotted to Shares Held by Investor Original Investor Investors Karachi 5267 52%

Lahore 1989 20%

Islamabad 1016 10%

Total 8272 82%

Rest of Pakistan 1715 18%

Grand Total 10023 100%

The survey reveals that:

1. Source of Investment Capital of Listed Companies is restricted primarily to residents of three cities i.e. Karachi, Lahore and Islamabad.

2. Only 12% of Potential source of Investment Capital is being tapped. 3. Major Segment of population of country does not have access to shares investment

market (Stock Market). 4. Approx. 88% of total potential source of Investment Capital remains un‐utilized.

POPULATION OF CITIES HAVING STOCK EXCHANGES

A SURVEY FOR DETERMINATION OF RESIDENCE OF SHARE HOLDERS


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3. The Listing Regulations of Karachi Stock Exchange (Guarantee) Limited.

ESTABLISHMENT OF ADDITIONAL TEN STOCK EACHANGES

This will complete the process of Industrial & Economic development of country

Additional 5929 listed Companies will generate gross domestic product of Rs. 3,593

billion per annum

Will create Employment for

2,979,500

Will enable harvesting of additional investment capital of

Rs. 1,460 billion

Additional Capital will enable formation of additional 5929

listed Companies

BIBLIOGRAPHY


20

DEVELOPMENT EXPENDITURE: A FAILED CONCEPT; A DEATH TRAP!

CHAPTER 5


21

Federal Government of Pakistan does not provide any service or benefits to citizens of Pakistan. National Defense is perhaps the one and the only beneficial and useful service provided by the Federal Government. What benefits do people of: Charsada or Bukkar receive from Federal Government? This is a very deep and penetrating question. Unfortunately the answer is none. Against total expenditure of Rs. 170.131 billion in 1997‐98, a sum of Rs. 90.106 billion was blasted away in the name of Development. The question which arises is that since Federal Government does not provide any services or benefits to citizens of Pakistan, then why does the Government such a huge amount of money year after year in the name of Development remedies and how to contain this monster within limits. It is important to know that approximately 50% of civilian none‐ Development expenditure is also wasted which also needs to be curtailed.

Basic services such as law and order, education, construction and maintenance of roads, sanitation, water supply and health are provided by the provincial and local governments. Other services such as electricity, gas, radio and television broadcasting, railway, shipping, telephone, telegraph, ordinance factories, air lines and ownership of industrial and commercial undertakings are in fact purely private sector functions, which are unnecessarily being provided by the Federal Government. These services are paid‐for from charges at a very high cost to consumer (public). The private sector can provide all of these services at one half the cost charged b) the Government enterprises. So the services provided by the Federal Government should in fact he provided by the private sector. And there exists no justification whatsoever for indulging in these activities by the Federal Government. Thus in fact Federal Government provides no cervices or benefits to citizens of Pakistan from tax revenue.

The concept of Development was envisioned by the communist revolutionaries who believed that industrial and economic development could be achieved by centralized planned economy approach. This concept has not been successful. The planned economies of Easter Europe and communist countries have failed to keep pace with Free Economies of Western Europe. The Socialist arid Communist countries have moved on to the concept of Free Economy approach. Unfortunately, the concept of planned economy or development approach is lingering on in this country. Practical experience of past seventeen years shows that nothing visible and tangible has been achieved from Development Expenditure. This concept must now be abandoned, it is a failed concept. The item of expenditure entitled, Development must be deleted from the annual budget of the country. It must be recognized that industrial and economic growth can only be achieved by undertakings by the private sector. Instead of Blasting Away 100‐billion per annum year after year, the emphasis should be on creation of 5.959 listed Companies in the private sector.

AN ANALYSIS OF SERVICES AND BENEFITS PROVIDED BY THE FEDERAL GOVERNMENT

DEVELOPMENT EXPENDITURE: A FAILED CONCEPT; A DEATH TRAP!

A FAILED CONCEPT


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There is direct relationship between Development Expenditure, burden of repayment of loans and more borrowing (deficit financing). Firstly, 90% of Development Expenditure is wasted. No tangible and visible achievements are on record. And secondly, the money borrowed for development has to be repaid with interest. The item Debt Servicing is in fact accumulation of many years of wasteful Development Expenditure in the shape of debts which are now being repaid.

(Rupees in Billion)

Repayment of Loans Percentage of Tax Of Loans Domestic Total Tax revenue extended Year Foreign & Interest Revenue on Repayment of loans 1993‐94 128.848 162.922 79% 1994‐95 133.067 180.160 74% 1995‐96 165.917 202.872 82% 1996‐97 198.523 221.581 90% 1997‐98 247.861 276.843 90% Source: Economic Survey, 1997‐98, Govt. of Pakistan

Country has fallen into a Death Trap, where in, entire tax revenue has to be diverted towards repayment of previous loans which were wasted in the name of development in the first place. And more money is being borrowed to finance more wasteful Development Expenditure and more wasteful Non‐Development Expenditure. The act of borrowing money for wasteful Development Expenditure creates shortage of Investment Capital resulting in halt to industrial growth, devaluation of currency, rise in prices, and rise in interest rates, lower Gross Domestic Product, un‐employment and ultimately leading to Economic Death! On September 1998 the Government of Pakistan was insolvent: it did not have funds to repay loans and it did not have funds to finance normal operational expenditure.

The general public of Pakistan has been wrongfully led into believing that Defense Expenditure is a burden on the economy. Every now and then policy makers shift economic failures on the Defense Expenditure. Statements and presumptions without reference to facts are harmful to national defense. The crux of the matter is that Defense Expenditure is the only expenditure which is beneficial with real benefits. Following benefits are provided by the Defense Expenditure:

A DEATH TRAP

TABLE SHOWING PERCENTAGE OF TAX REVENUE UTILIZED FOR REPAYMENT OF LOANS

EXPENDITURE ON DEFENSE


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1. Protection of borders from hostile neighbors.

2. Development of highly qualified, (academically and technically) manpower. Defense personnel are more qualified than their civilian counterparts by virtue of constant training of Defense personnel.

3. Maintenance of cantonment areas of country. Cantonment areas are better maintained than other parts of city due to discipline and systematic‐approach of defense personnel.

4. Financing and administration of a large number of educational and technical institutions which are beneficial not only for defense but are useful for the entire country.

5. Establishment and maintenance of Ordinance Factories which provide employment create GDP, save foreign exchange and through which technical know‐how has been transferred into this country.

6. Defense Expenditure provides employment for a very large segment of population (defense personnel) who provide useful services. This greatly provides relief to population which would otherwise be unemployed. An ultimate goal of all governments of countries of world is to provide employment for its citizens.

7. Because of better academic and technical qualification and training in discipline, the retired defense personnel continue to be useful citizens even after retirement.

The most important, useful and most beneficial service which the Federal Government can provide to citizens of Pakistan is, to stop wasting money, eliminate development expenditure, reduce nondevelopment expenditure by 50% and to stop borrowing from domestic and foreign sources. The most important task at hand at this hour for the parliament of Pakistan is to find ways and means to reduce wasteful federal expenditure. There is literally nothing which requires to be developed by Federal Government. Let us follow the example of the great nation of United States of America and leave the task of economic and industrial development to the private sector. Mega Projects Only

There are very few mega projects which required the help of Federal Government and they are:

1. Construction of double tract railway line for main tract and subsidiary tract. 2. Large Dams 3. Sea ports and air ports. 4. Super high ways.

WHAT SHOULD BE DEVELOPED


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Steps for Quick Economic and Industrial Growth

For a quick economic and industrial growth, the following steps are required to be completed:

1. The function of education for class 1 to 10 should be entrusted to local government as in USA.

2. One hundred and fifteen universities should be created. One university in each district for general public and one university in each division for women.

3. Ten stock exchanges may be created in major cities by the private sector. 4. Pension scheme for all old citizens of Pakistan may be commenced immediately. 5. Gold reserves must be increased gradually to reach required level of 28 billion dollar. 6. There must be complete halt to government borrowing from foreign loan agencies.

Above measure if implemented wholeheartedly will quickly transform this poverty stricken country into a rich nation.



3. An interview with Mr. Muhammad Aslam Siddiqi, Manager National Bank of Pakistan, who provided information on the prevailing system of foreign exchange controls of State Bank of Pakistan.

BIBLIOGRAPHY


25

DEFECTS IN THE EDUCATIONAL SYSTEM

CHAPTER 6


26

The educational activity must be recognized as a service industry. This activity fulfills the criteria for qualification as a service industry. The educational activity has the following basic characteristics which qualify it as a service industry. Product: A service product in the form of education and Knowledge is created. And to the consumer (student) this product is delivered in the shape of certificates, diplomas and degrees. The final shape of product has greater economic value than raw factors of production. Factors of Production: Basic factors of production namely, land; capital labor and entrepreneurship are converted into educational service or knowledge. Economic Benefit: The service product created has far greater economic value to the individual and society as a whole than the factors of production. For example, cost of a MBA degree is approximately Rs. 34,000 for two years of study at the rate of Rs. 1,000 per month in fees and Rs. 5,000 per annum for books and material for study. An MBA degree holder is likely to be employed at a starting of Rs. 5,000 per month. Thus, cost of degree (product) will be recouped in just seven months. And for the remainder of employment service, the degree holder will earn salary (economic gain) having much greater value than cost of degree. Similar economic benefits will accrue to all holders of other types of educational qualifications. The point being made here is that educational institutions are in fact a service industry. These institutions produce a very valuable product entitled, education. And the cumulative value (cost) of this product is in fact, Gross Domestic Product.

There are many benefits of economic developments, Exhibit ‐1, 2, 3, 5 may be seen for detail. Some of the important benefits are listed below:

1. Establishment of required number of educational institutions will create employment opportunities for 1.455 million persons.

2. Gross Domestic Product having value of Rs. 84.516 billion will be generated per annum.

3. Approximately 20.809 million persons will be absorbed in institutions of learning. Absorption of child laborers as students will in fact create better employment opportunities for the remaining population.

EDUCATION: A SERVICE INDUSTRY

ECONOMIC BENEFITS OF EDUCATIONAL DEVELOPMENT


27

4. A large educated population will be able to utilize available financial, natural and personal resources more efficiently to the benefits of individual and the society as a whole.

5. Education will enable young citizens to acquire technical training and advanced knowledge for gainful occupations.

6. Secondary and dependent industries, paper, printing and publishing will become fully developed due to greater demand for paper and books.

7. Educated population will provide impetus for development of all other industries because as a whole require educated personnel having technical skills.

A very important aspect of educational institutions is creation of employment opportunities for a very segment of population. In addition to imparting of knowledge to population, these institutions add GDP to national economy. An exceedingly important benefit of educational activity is that institutions of learning absorb a very segment of young citizens as students, who otherwise would end up as child labourers. The child labourers not only create bleak future for young citizens but this activity also takes away employment opportunities from adult population.

The present overall administrative system of Pakistan for management of educational function has failed to meet the needs of population. In spite of best efforts of provincial governments, desirable results are not forthcoming. Therefore, in order to determine where we stand in relation to other advanced countries and to detect obstacles in the system, it is exceedingly important to compare the administrative systems of education of Pakistan with administrative system of education of the most advanced nation of the world, United States of America.

A COMPARISON OF EDUCATIONAL SYSTEMS OF UNITED STATES OFAMERICA AND PAKISTAN


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Type of Number of Total Institution Institution Enrolment Elementary 64,091 35,700,000

Middle (Class7,8,9) 14,475 (Elementary and Middle)

Secondary (Class10,11,12) 27,197 15,000,000

Higher Learning 3,706 14,398,000

Total 109,469 65,098,000

Total Enrolment in percentage of total population 24.54% Number and type of Institutions required Segment of Population One primary school for every, 2,356 persons One middle school for every, 3,810 persons One high school for every, 7,957 persons One intermediate college for every, 13,262 persons One Institution of higher learning for every, 90,186 persons One university for every, 450,900 persons

ENROLMENT OF STUDENTS IN INSTITUTIONS OF LEARNING IN UNITED STATES OF AMERICA(POPULATION,265,284,000 IN 1996)

NUMBER AND TYPE OF INSTITUTIONS OF LEARNING REQUIRED FORVARIOUS SEGMENTS OF POPULATION

how to make pakistan a rich country

Documents

additional

gross domestic

educated person

service product

defense expenditure

young citizens

service industry

federal government