Pakistan – Non-Conducive To Capital Formation

The economy being a capital-poor or low-saving and low-investing is not playing a conducive role in capital formation. Consequently, the rate of gross investment is not more than 81.1 per cent of GPD in 2003-2004 as against 25-30 per cent in developed countries.

Such low rate of growth of capital stock is hardly enough to provide help to rapidly growing population. The root cause of this deficiency is extreme inequality in the distribution of incomes. In fact, large savings are possible only when the rich class saves 3 to 5 per cent per year.

Unluckily, the rich class prefers to invest their savings in unproductive channels i.e. election campaign, or purchasing real estates, gold and jewellery in the country and investment in foreign money markets.

 

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