Industrial Concentration and Economic Power in Pakistan

Industrial Concentration and Economic Power in Pakistan

Lawrence J. White
Copyright Date: 1974
Pages: 224
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    Industrial Concentration and Economic Power in Pakistan
    Book Description:

    Although observers of the Pakistani economy are well aware that a small number of family groups, popularly called "the twenty-two families," dominates the industrial structure of the country, the actual effects of this concentration of economic power on income distribution and on other areas of widespread social and political concern arc less well understood. In this important work, Lawrence J. White uses the concepts of industrial organization analysis to achieve an overall view of the problems stemming from the marked industrial concentration in Pakistan.

    After discussing the economic effects of industrial concentration as they apply generally to less developed countries, Professor White reviews the Pakistani experience, estimating the overall concentration of power that exists in manufacturing, banking, and insurance. Following an estimate of the extent of concentration in individual markets, he examines the origins of this concentration of power and analyzes its economic and noneconomic effects in Pakistan. The author concludes with a review of the policies that Pakistan has pursued in dealing with industrial concentration and suggests new courses of action for the future.

    Originally published in 1974.

    ThePrinceton Legacy Libraryuses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

    eISBN: 978-1-4008-7179-7
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. List of Tables
    (pp. ix-x)
  4. Preface
    (pp. xi-2)
    Lawrence J. White
  5. Chapter 1 Introduction
    (pp. 3-9)

    Within a few weeks of taking office, Pakistan’s President Z. A. Bhutto, in January 1972, “nationalized” ten industries in Pakistan and placed under house arrest two of the leading Pakistani industrialists.¹ Both actions were somewhat symbolic: the government already controlled a number of the firms in these industries and it only appointed new managers for the remaining firms, while allowing the ownership of the assets to remain with the original owners; the two industrialists were released shortly afterwards. But the actions were taken in response to a real political problem within Pakistan. A comparative handful of family groups dominate the...

  6. Chapter 2 The General Problem
    (pp. 10-35)

    At the beginning, one has to ask why anyone should really care about what happens in the industrial sector of the economy of LDC’s. This might appear to be a foolish question, since most of the economic policies of LDC’s over the past twenty years have been aimed at creating an industrial sector, and much scholarly time and effort has recently been devoted to analyzing the trade and protection policies of LDC’s that have been designed to encourage industry.¹ Yet, the industrial sector is comparatively small in most LDC’s. Many of these countries are still predominantly agricultural. Outside of Latin...

  7. Chapter 3 The Pakistani Background
    (pp. 36-44)

    The story of the growth of Pakistani industry has been told elsewhere, and only the major features need be repeated here.¹ At Partition in 1947, both wings of the newly created Pakistan were largely agricultural, with virtually no industry or attendant services. West Pakistani agriculture was based on cotton and wheat; East Pakistani agriculture centered on rice and jute. The collapse of the Korean War raw materials boom turned the terms of trade against Pakistani raw materials and in favor of manufactures. The refusal of Pakistan to devalue after the collapse of the raw materials boom meant that the demand...

  8. Chapter 4 Concentration of Industrial Economic Power
    (pp. 45-85)

    Much attention has been given in Pakistan to the question of how much of the industrial sector is controlled by the leading industrial families. Unfortunately, casual empiricism tended to dominate the discussion in the late 1960’s, and there was little in the way of verifiable and meaningful analysis. It is possible, however, to put together in a systematic manner a reasonably complete picture of the holdings of the industrial families and relate it to a meaningful total for the entire manufacturing sector. That is the task of this chapter.

    The chapter proceeds as follows: After a review of the past...

  9. Chapter 5 Concentration by Industry
    (pp. 86-112)

    If one wishes to explore the causes and effects of monopoly and market power, one needs to know where it exists. This requires information on market structure and concentration in individual industries. This kind of information has become a regular part of the statistics yielded by the periodic industrial censuses in many developed countries, but it is not available for most LDC’s. This chapter attempts to develop a picture of the market structure of a large number of industries in Pakistan.

    This chapter first presents a brief discussion of the problems and pitfalls of trying to measure concentration in individual...

  10. Chapter 6 The Origins of Concentration
    (pp. 113-127)

    The findings of the two preceding chapters have indicated that the Pakistan economy experienced high rates of concentration for the 1960’s, both across the entire manufacturing sector and for individual industries. This chapter examines the origins of both kinds of concentration. The analysis of Chapter 2 indicated that the establishment and maintenance of market power required the existence of significant barriers to entry. This chapter examines the role of scale economies barriers and scarce resources barriers in maintaining industrial concentration. It is also argued that scarce resources barriers, mostly created by deliberate government policy, were crucial to the continued domination...

  11. Chapter 7 The Effects of Concentration
    (pp. 128-166)

    Pakistan is characterized by a high degree of overall concentration in its manufacturing sector and generally by oligopolies in its individual manufacturing markets. Chapter 2 indicated the general consequences that one might expect from these structural characteristics. This chapter discusses the effects—economic and non-economic—actually found in Pakistan. First, some institutional qualifications to the oligopoly structure found in Pakistan are discussed. Then, a simple model explaining industrial profit rates is presented. Innovation is mentioned. The economic performance of family and non-family firms is analyzed. The political influence and power that grew from and reinforced the economic power of the...

  12. Chapter 8 Policies and Problems
    (pp. 167-184)

    The intertangled knot of monopoly power, economic power, political power, and income distribution creates extremely difficult problems for any country, and they seem to be especially difficult for LDC’s. This study has documented the extent, origins, and effects of industrial concentration and economic power in one LDC, Pakistan. I strongly suspect that similar studies for other LDC’s would reveal the same broad picture, even though the individual details might be quite different.

    Are there useful policy prescriptions that can be offered to deal with these problems? I believe that there are. The first section of this chapter sets out two...

  13. Appendix to Chapter 4
    (pp. 185-192)
  14. Bibliography
    (pp. 193-206)
  15. Index
    (pp. 207-212)
  16. Back Matter
    (pp. 213-213)