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Its development programs have bitten off a larger and larger share of the physical and financial resources of the Government, as appears in the table below.

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The problem of financing these increased outlays for development has been greatly intensified because of the falling export and import revenues and the lack of foreign exchange. Borrowing has been an important source and internal bond issues have received general support, but the rate of capital formation is slow and this source of revenue appears to be inadequate. Increased taxes, in the view of the Pakistani, do not appear feasible in view of the already low standard of living and the risk of impairing incentive. The Pakistan Government has thus sought external aid to assist in financing its development program.

Development Progress

Carrying out its "courageous" decision to push economic development at the expense of consumer needs, Pakistan has pushed ahead vigorously with its program-and with considerable progress. The emergency food problems of 1952 and 1953 have been mastered and adequate domestic food stocks appear to be available now. Complete statistical reports are sketchy or not available at all, but evidence of progress is available in almost every sector.

The increase in some industries has been very rapid. Production of cotton yarn increased from 129 million pounds in 1952-53 to 171 million pounds in 1953-54, and cotton cloth from 169 million yards to 244 million yards. Industrial production started at the time of partition, however, almost at zero, and has not yet risen to a selfsufficient level. Impressive as this development might appear, it can only be meaningful when measured against the growth of Pakistan's population, since economic development which lags behind the population produces a decreasing standard of living.

Lacking reliable statistics in this field, officials of the Pakistan and United States Government have been reduced to guesses in this field, supported by the meager facts available. On this basis, however, there is real concern that the present rate of development in Pakistan is not in reality sufficient to meet the needs of an expanding population.

In an effort to shed more light on these critical problems, the revitalized Pakistan Planning Commission, with help from Harvard University, has been surveying the national development and its report is expected in the near future.

An increased rate of economic development is apparently possible only through increased foreign aid, better utilization of internal resources, and increased private investment. The Pakistan Government has been seeking each of these objectives.

Thus, the development of a stronger economy in Pakistan can only be a slow, difficult process.

Not all of Pakistan's problems were unavoidable. The economic policies of the Pakistan Government have come in for some criticism from those who believe it failed to move effectively and swiftly enough when the world markets broke in 1952, and that many of its policies have been stifling to enterprise rather than encouraging.

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X. Findings and Conclusions

1. United States aid to Pakistan started out as a program of technical assistance, the size and justification of which was influenced more by other factors than by the needs or ability of Pakistan to absorb the aid. This, in 1952 and 1953, resulted in a program which appears to have been larger than the administrative ability of the Pakistan Government or the United States agency.

2. The economic crisis in Pakistan, resulting from the drop in world commodity prices after the Korean war, gave rise to an urgent need in Pakistan for technical and economic aid, in order to provide economic progress and political stability.

3. The worsening economic situation in Pakistan has prevented United States aid, to date, from achieving its objectives. The nation is not yet assured of an adequate rate of economic development, measured by the minimum needs of its citizens.

4. Reasonable results in terms of economic development and political stability cannot be achieved overnight, but the data available on the Pakistan economy is not sufficient at this time to permit very well informed estimates on the future needs or the efforts required to meet those needs.

5. The military and defense efforts of Pakistan, as they relate to the total defense of the free world, of course, form an important facet of the total United States program for Pakistan. It seems fair to conclude that the Pakistan Government cannot materially expand its defense efforts without risking serious economic consequences. This implies aid in various forms, including "defense support," which embraces almost anything in the form of economic aid which directly or indirectly contributes to the strength of the nation.

6. The program in Pakistan demonstrates the difficulty, and perhaps inadvisability under some circumstances, of distinguishing between technical assistance (or technical cooperation) and economic, developmental, or defense support assistance.

7. The $105 million program for fiscal year 1955, while apparently important for psychological reasons, may be difficult to implement fully in the remaining 6 months of the fiscal year because it constitutes such an expansion of the United States program.

8. Difficulties in recruiting United States personnel for Pakistan have slowed the program, and apparently have not been fully taken into account in preparing budget estimates. There is some indication that United States technical personnel in some respects have been too technical for some segments of the program.

9. Administration of the Pakistan aid program during the initial period, under the terms of the act for international development as a technical assistance program, apparently led to some difficulties, and resulted, for instance, in justification of 85,000 tons of fertilizer on a purely demonstration purpose, when its real purpose appears to have been to create an impact program with swift results in terms of increased food production (which seems to have been critically needed in Pakistan at the time).

10. The use of contracts with United States firms or institutions appears to provide a means of improving the program in Pakistan, especially by making it possible to proceed with the actual implementation of development projects and the training of Pakistani at the same time. However, additional study and work needs to be done to assure a close, direct relationship between the United States contractor and the Pakistan individuals or institutions, without at the same time eliminating United States control entirely.

11. Internal problems in the Pakistan Government, chiefly traceable to the chronic shortage of trained personnel, have handicapped the administration of the United States program in Pakistan and slowed its progress. The relationship between the Federal Government and the state or provincial governments in Pakistan has not yet been clearly worked out in the 7 years of the nation's existence, and United States aid programs have been caught in the middle of these intergovernmental relationships.

12. The emergency wheat and the flood relief programs in Pakistan have resulted in a considerable reservoir of good feeling for the United States on the part of the Government and the people of Pakistan, although some phases of the program may need further review.

13. The relationship between the United States mission and the Embassy in Pakistan has not been entirely satisfactory, and no integration has taken place. Proposals for improvement of the situation will not be fully implemented until the termination of FOA becomes effective.

14. The close, harmonious working relationship between FOA and the Department of State in Washington has apparently benefited the Pakistan program and might be worth noting in connection with the future of the program after June 30, 1955.

15. The lack of adequate planning and scheduling for economic development on the part of the Pakistan Government has handicapped the United States program, especially in the development of relative priorities. At the present time, increasing efforts are being made in planning and programing by the Pakistan Government. Particularly in its initial stages, the lack of planning, and the lack of data on which to plan, results in considerable delays in the United States

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