Learning Point

  Relationship between politics and economy: Relationship Between Politics and Economy (With Examples) The relationship between politics and the economy is deeply interconnected and interdependent . Politics influences economic decisions, while economic conditions shape political stability and power. Understanding this relationship helps explain why some nations prosper while others struggle with development and inequality. 1. Politics Influences the Economy Political decisions directly affect a country’s economic growth, stability, and distribution of wealth . Governments create policies that influence how businesses operate, how people are taxed, and how resources are used. Examples: Fiscal Policy: When a government reduces taxes or increases public spending , it can stimulate economic growth. Example: During the COVID-19 pandemic, many countries (including Pakistan and the U.S.) increased government spending to protect jobs and ...

  1. Fiscal Deficit and Debt Burden Pakistan faces a chronic budget deficit due to low tax revenue and high government spending. Reliance on domestic and international borrowing has led to a mounting debt crisis . IMF programs and conditional loans often influence Pakistan’s political and economic policies. 2. Taxation System and Revenue Generation Tax-to-GDP ratio remains one of the lowest in South Asia . Widespread tax evasion, exemptions for elites, and weak enforcement undermine revenue collection. Heavy reliance on indirect taxes increases the burden on the poor and middle class. 3. Energy Crisis and Circular Debt Power shortages and circular debt in the energy sector remain persistent. Dependence on imported fuels increases economic vulnerability. Political interference and poor management weaken reforms in the power sector. 4. Dependence on Agriculture ...

  1. Understanding the Link between Politics and Economics Politics in Pakistan cannot be separated from economics. Decisions about taxation, subsidies, defense spending, or foreign aid are deeply political. Students learn how governments use economic tools to gain legitimacy or maintain power. 2. Analyzing State and Policy Formation The subject helps students understand why Pakistan adopts certain policies (e.g., IMF loans, CPEC projects, subsidies on wheat). They learn how ruling elites, bureaucracy, military, and business groups influence economic decision-making.     3. Explaining Development and Governance Challenges Poverty, unemployment, energy crises, and inflation are not only economic issues—they are political questions. Students can critically analyze how weak institutions, corruption, and governance failures shape economic outcomes. 4. Link to I...

  Political Challenges Affecting Economy Frequent Government Changes → unstable economic policies. Civil-Military Relations → military’s influence on economic priorities (e.g., defense vs. development spending). Corruption & Weak Institutions → inefficient resource management. Federal-Provincial Tensions → disputes over NFC Award, water distribution, and natural resources. Current Issues (2025 Context) High inflation and rupee depreciation. Energy shortages and circular debt in the power sector. Rising external debt → IMF dependency. Youth bulge and unemployment. Political instability affecting investor confidence. Future Prospects Strengthening institutions for transparency and accountability. Broadening the tax base to reduce dependency on loans. Diversifying exports beyond textiles (IT, agriculture, minerals). Investment in education, human capital...

  Key Features of Pakistan’s Political Economy Dependence on Agriculture Agriculture employs ~36% of workforce but contributes less to GDP. Issues: water scarcity, outdated farming methods, land concentration. Industrial and Trade Policies Over-reliance on textiles and low-value exports. Protectionist policies discouraged diversification. Trade deficits are chronic. Role of Foreign Aid & IMF Pakistan’s economy often relies on foreign loans and aid. Political bargaining shapes loan conditionalities and reforms. Elite Capture & Rent-Seeking Political elites, landlords, business families, and military often dominate resource allocation. This leads to corruption, tax evasion, and inequitable policies. Remittances A major source of foreign exchange, often stabilizing the economy when exports fall short. Taxation & Fi...

  1947–1958 (Early Years) : Pakistan inherited a weak industrial and financial base. Reliance on agriculture, limited infrastructure, and dependence on foreign aid shaped economic policies. 1958–1971 (Ayub Khan Era) : Introduced industrialization, Green Revolution in agriculture, and economic planning. Growth was high, but income inequality increased, leading to political unrest. 1971–1977 (Bhutto Era) : Nationalization of industries and banks. Attempted socialist-style reforms, but inefficiency and low productivity weakened the economy. 1977–1988 (Zia Era) : Shift towards Islamization, remittances from overseas workers, and Afghan War aid. Growth improved, but structural reforms were avoided. 1988–1999 (Democratic Governments) : Frequent changes of governments (Benazir vs. Nawaz), weak institutions, corruption, and debt accumulation slowed growth. 1999–2008 (Musharraf Era) : Privatization, ...

  Economics: The branch of knowledge concerned with the production, consumption, and transfer of wealth. Economics is the social science that studies how individuals, businesses, and societies make choices to allocate limited resources to fulfill unlimited wants and needs. It focuses on the production, distribution, and consumption of goods and services, analyzing everything from individual decision-making (microeconomics) to the economy as a whole (macroeconomics).  Politics: In Aristotle's hierarchical system of philosophy he considers politics, the study of communities, to be of higher priority than ethics, which concerns individuals. The title of Politics literally means "the things concerning the πόλις (polis)". Politics (from Ancient Greek πολιτικά (politiká) 'affairs of the cities') is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of status or r...

  A dvantages of entrepreneurship for Political Science students , linking their field to entrepreneurial opportunities: 1. Application of Leadership Skills Political Science students study leadership, governance, and power structures. Entrepreneurship allows them to apply these skills by leading teams, managing organizations, and inspiring innovation. 2. Policy and Regulation Awareness Entrepreneurs must navigate laws, trade policies, and regulations. Political Science students already have an edge in understanding legal frameworks, making them better equipped to start compliant and sustainable businesses. 3. Strong Communication and Persuasion Skills Political Science emphasizes debate, negotiation, and public speaking. These abilities are crucial for entrepreneurs when pitching to investors, convincing customers, or managing partnerships. 4. Strategic and Analytical Thinking Political theories and policy analysi...