Foreign Trade Regime and Savings in Pakistan

Without generating high growth rates of national income, acountry cannot make a sustained attack on poverty, unemployment, andother economic problems. Developing countries have, generally, pursuedthe goal of rapid economic growth with the help of industrialisation. Inthis regard, an optimal structure of the industries enables a country toexperience ‘sustainable’ economic growth. Countries adopt various tradestrategies to allocate resources to their optimal use in order toexploit their industrial potential. Developing countries, includingPakistan, have adopted the import -substituting (IS) trade strategy tofoster industrialisation.1 But the disillusionment with the IS strategyand its results is increasing over time. Contributing to this trend isthe remarkable increases in growth rates by many countries that haveshifted to an export-promoting (EP) trade strategy. At the same timecame a fundamental question of the adequacy of economic growth itself.That is to what extent the economic growth under the IS strategy hasgiven rise to the unfavourable results with respect to employment,capital accumulation, and income distribution. Analysis of these effectspresents a tall order and we do not go that far in their evaluation. Inthis study we restrict ourselves to the question how various traderegimes are related with savings. The nature of this relation issomewhat complex.