Pakistan - Economic sectors

Services dominate the Pakistani economy. In 1998, they contributed 48.2 percent to GDP, while agriculture and industry each accounted for about a quarter of gross domestic production (25.2 percent and 26.6 percent, respectively). After the crisis following the nuclear standoff with India and the subsequent international sanctions against Pakistan in May 1998, value-added large-scale manufacturing was projected to grow by only 2.4 percent in 1998-99, sharply down from 6.2 percent in 1997-98. Growth of the agricultural sector, too, was expected to be only about half the level of the previous year. The manufacturing sector has seen dramatic fluctuations, averaging 9 percent per year during the first 2 decades of independence, but dropping to less than 3 percent in the 1970s, when large-scale nationalization significantly reduced investment levels. The rate recovered in the 1980s, averaging 7.6 percent, but fell back to 3.9 percent in the 5 years prior to 1999-2000.

A common feature in developing countries is the informal sector , often making up a good deal of the services sector. The popular view of informal sector activities is that they are primarily those of petty traders, smugglers, drug traffickers, street hawkers , shoeshine boys, and other groups underemployed on the streets of the big towns. Evidence suggests that the bulk of employment in the informal sector, far from being only marginally productive, is economically efficient and profit-making, though mostly small in scale and limited by

simple technologies and little capital. The informal sector employs a variety of tradesmen offering virtually the full range of basic skills needed to provide goods and services for a large though often poor section of the population. Persons employed in this sector are not documented, meaning they do not have access to public services and do not pay income tax. The informal sector also includes the heroin manufacturers flourishing in the North-West Frontier Province and Baluchistan, who compensate for the bareness of their soil and the neglect of successive central governments by resorting to the " black market " economy, notably the processing of opium, grown in neighboring Afghanistan, into heroin. Smuggling across the porous border with Afghanistan is also a large constituent of the economy. However, the opium smuggling trade with Afghanistan will no doubt be undercut by the U.S. bombing campaign in Afghanistan, which targeted Afghani poppy fields as well as Taliban military operations. Acting in cooperation with the United States, Pakistan officially closed its border with Afghanistan, which could also stem the flow of drugs into Pakistan.