Industrial Development – Secondary and Tertiary Industries (Comprehensive Study Notes)

Unit Focus & Context

• Concentrates on Pakistan’s transition from a mainly agrarian economy (1947) to a semi-industrial state with growing tertiary activities.
• Examines secondary (processing/manufacturing) and tertiary (service) industries, their location factors, government policy, environmental impacts, and future sustainability.

Main Industrial Classifications

• Primary industry – extraction/collection of natural resources (agriculture, fishing, mining).
• Secondary industry – transforms primary/secondary raw materials into semi-finished or finished goods.
• Tertiary industry – provides paid services (banking, tourism, transport, call-centres, etc.).
• Scale terms
  • Cottage / craft (home-based, family labour).
  • Small & medium factory (≤ ≈10 workers, fixed assets ≤ Rs 10 million).
  • Large-scale factory / multinational.

Secondary Industry as a System (Fig 9.1)

• Inputs → Processes → Outputs (+ Waste → recycling) → Profit → reinvestment.
• INPUTS
  • Capital (finance).
  • Enterprise (business skill).
  • Land (site).
  • Raw materials (primary or secondary).
  • Power (electricity, coal, gas, oil, hydel).
  • Labour (numbers + skills).
• PROCESSES
  • Mechanical / chemical stages: smelting, spinning, weaving, dyeing, moulding, tanning, printing, stitching.
• OUTPUTS
  1. Processed goods (cement, cotton yarn, ghee, sugar, flour…).
  2. Manufactured intermediates (bottles, steel sheets, axles, motors…).
  3. Final consumer goods (drugs, fans, garments, tractors…).
  4. Construction products (factories, schools, hospitals).

Factors Influencing Industrial Location (Fig 9.2 & 9.3)

• PHYSICAL
  • Site: size, level, drainage, ability to modify.
  • Natural routes: ports, passes, rivers reduce transport cost.
• HUMAN
  • Access to market: distance & cheapest transport.
  • Raw-material availability & reliability.
  • Skilled labour supply.
  • Power supply: type & cost.
  • Industrial linkages: benefit from nearby plants.
  • Capital availability.
  • Government policy incentives: subsidies, tax holidays, infrastructure, SEZ status.

Raw-Material Types (Fig 9.5)

• Sustainable / renewable: timber, water, wind, sunlight.
• Non-renewable: metallic ores (iron, copper, chromite), non-metallic (limestone, gypsum, rock-salt), coal, oil, gas.
• Processed/Manufactured raw materials: wheat flour → bakery; cotton yarn → cloth; cloth → garments; wood pulp → paper.
• Imported raw materials raise production cost (e.g., oil refining, iron & steel, fertiliser, car assembly).

Principal Factory Industries in Pakistan

1 Cotton Textile (largest; 40 % of industrial labour)

• Centres: Karachi, Hyderabad, Faisalabad + Lahore, Multan, Rahim Yar Khan, Hub (Fig 9.6).
• Location factors (Fig 9.7)
  • Near cotton belt (Sindh & Punjab), port proximity, abundant labour, local humid climate demand, Korangi & Bin Qasim power
  • Good transport links, capital & entrepreneurs, favourable govt infrastructure.
• Process chain: ginning → spinning (Fig 9.8) → weaving (Fig 9.9) → finishing.
• Importance
  • $\approx65\%$ of exports; $\approx8.5\%$ of GDP; value-added FX; supports farmers; economies of scale; cheap labour.
• Problems
  • Leaf-curl virus raw-material shortage; int’l recession & competition (S. Korea, Egypt, Taiwan, HK, Thailand); outdated machinery; capital needs; child-labour/environment bans; power cuts; water shortage; poor transport & political instability; policy instability; terrorism.

2 Sugar

• Raw material: sugar-cane (perishable, bulky → mills near fields).
• Provinces: Punjab, KP, Sindh; none in Balochistan (Fig 9.13).
• 2020-21 production projected > 5.7 Mt (+ 50 kt carry-over).
• By-products: bagasse (fuel, chipboard, paper, fodder); molasses (chemicals).

3 Fertiliser

• Main raw material: natural gas + sulphur, phosphate, gypsum.
• Plants: Faisalabad, Daud Khel, Haripur, Dharki (Fig 9.15); 21 factories; output ≈ 8 Mt (2018).
• Supplied by Mari gasfield (15 Mm³ d⁻¹ to 3 plants).
• Govt: tax breaks + farmer subsidies; ≈ 100 % of output consumed domestically; ~20 % fertiliser still imported.
• Constraint: gas competition with power & domestic use; Mari reserves only 8–10 yrs left (2018 estimate).

4 Cement

• Inputs: limestone + gypsum (local), cheap natural gas.
• Sites widespread (Fig 9.17); demand rising with construction → prices up.

5 Steel

• Pakistan Steel Mills (PSM) at Pipri, Port Qasim; established 1973 with USSR aid, closed 2015 (high costs).
  • Location reasons (Fig 9.21)
  • Flat cheap land; harbour; imported iron ore, manganese, coking coal via port; limestone from Murli Hills; water from Haleji Lake; large nearby power; Karachi labour & market; rail/road links.
• Heavy Mechanical Complex (HMC) + Heavy Forge Factory (HFF) at Taxila (1979, Chinese support): heavy engineering, defence, hydro/thermal/oil-gas plant equipment.
• Advantages: domestic raw-material supply for many industries, import substitution, FX saving, GDP growth, jobs.
• Disadvantages: imported ores & coal, infrastructure cost, skill shortage, pollution, electricity demand.

Industrial Estates

• Designated industrial-only zones with roads, power, water, sanitation.
• First estate: SITE Karachi (1947); total ≈ 72 (Sindh 24, Punjab 20, KP 15, Balochistan 10, ICT 3).
• Incentives: duty-free machinery, tax holidays, private estate initiatives.

Special Industrial Zones (SIZ) & CPEC SEZs

• Govt offers zones even where infra absent; investors build utilities with agency help.
• Incentives: tax exemptions, relaxed FX control, simplified procedures, security.
• Under CPEC plan → 37 SEZs nationwide; focus on iron & steel, chemicals, pharma, engineering, appliances; environmentally friendly.
• Challenge: policy inconsistency undermines investor confidence.

Evolution of Government Industrial Policy

1. 1947-71 – Private-sector led with PIDC support
   • PIDC filled capital-intensive gaps, then sold projects to private firms.
   • Incentives: liberal taxes, protective tariffs, industrial estates, training, export bonus, import concessions, loans (Fig 9.26). → "Era of Industrialisation" 1960s.
2. 1972-77 – Nationalisation
   • Ten basic industries → public sector (steel, metals, heavy engineering, petro-chem, cement, utilities). Private investment slumped.
3. 1977-88 – Denationalisation
   • Martial Law govt: no more nationalisation; agro-based units returned; private share rose to $80.5\%$.
4. 1988 → present – Privatisation, Liberalisation, Deregulation
   • Aim: raise productivity, reduce fiscal burden, spur industrialisation; SOEs sold off from 1991.

Formal vs Informal Sectors (Fig 9.31)

• Formal: capital-intensive, mechanised, registered, regular wages, quality standards, urban factories; mainly male labour; significant GDP & export share.
• Informal: labour-intensive, hand tools, home/street, unregistered, irregular wages, often female/child labour.
• Contributions: supply domestic goods, employment, use local raw-materials, some exports.
• Informal disadvantages: no tax revenue, sub-standard goods, limited growth, child labour, poor H&S.

Cottage, Craft & Small-Scale Industries

• Vital for rural economy; families earn from carpets, embroidery, brassware, pottery, bangles, rugs.
• Reasons to encourage (Fig 9.34)
  • Employ $\approx80\%$ of industrial labour; self-employment; female participation; meet local demand, save FX; 30 % of manufactured exports; reduce rural-urban migration; reduce regional disparity; utilise local raw-materials & large-scale industry waste; low capital/tech requirement.
• Examples & centres (Fig 9.43)
  • Sports goods & surgical instruments (Sialkot), cutlery (Wazirabad), electric fans (Gujrat), carpets & embroidery (Multan, Karachi), carved wood/ivory (Chiniot), brick kilns (Punjab rural), engineering workshops.
• Sports goods: hand-stitched footballs; mix of formal/informal; child-labour criticism; supplied FIFA 1998 WC.
• Surgical instruments: >95\% exported; $\approx\$20\,\text{bn}$ PKR exports y⁻¹; child labour & H&S issues.
• Brick kilns: labour-intensive, Afghan refugees & children; high energy use; pollution (CO, SO₂, NOₓ); clay-pit land degradation.
• Problems
  • Low profit & capital, no economies of scale, poor quality control, obsolete tech, exploitation by wholesalers, power shortages, limited training.
• Govt support bodies: PSIC (federal & Punjab), SSIC, SIDB KP, DSIB Balochistan → estates, finance, training, marketing.

Industrialisation & Environmental Concerns

• ~8000 units unmonitored; air, water, land & noise pollution.
• Karachi coast: 135 km polluted; industrial & municipal effluent harms mangroves, fish, seafood; ship spills.
• Health impacts: lead in blood, asthma, skin, GI, hearing loss.
• Control measures
  • Enforce disposal & treatment; subsidise treatment plants; switch kilns to natural gas; tall chimneys, filtration; afforestation; relocate industries from residential zones; public awareness; PEPA 1997 & NEQS standards.

Sustainable Industry Requirements

• Conserve non-renewables; develop renewables.
• Sustainable agriculture for agro-industry.
• Skill development; safe & secure labour conditions.
• Waste minimisation & energy recovery.
• Recycling & safe toxic-waste disposal.
• Strong tertiary support (transport/banking).
• Political stability + market research; otherwise risk reverting to low-tech traditional production.

Tertiary Industry Focus

Tourism

• Pre-COVID, tourism = $10\%$ of world GDP; globally 330 M jobs.
• Pakistan attractions
  • Adventure (trekking, K-2, skiing at Malam Jabba).
  • Nature & wildlife (national parks).
  • Culture & heritage (Mohenjo-daro, Harappa, Taxila, Lahore Fort, Shalimar, Badshahi Mosque, Khewra salt mine).
  • Modern landmarks (Faisal Mosque, Minar-e-Pakistan, Tarbela Dam).
• Development factors (Fig 9.50)
  1. Attractions presence.
  2. Tourist security (post-2001 decline; recovery post-2015).
  3. Infrastructure & transport (roads, airports, hotels, water, electricity, hospitals).
  4. Capital availability (govt spends more on marketing than infra).
  5. Marketing & publicity (PTDC, websites, apps; yet scope to improve).
  6. Government priority (NTCB 2018, PTDC restructure, KP tourism authority & police, 33 % female quota).
• Statistics (Fig 9.52)
  • Foreign arrivals: $0.53\text{ M}$ (2010) → $1.9\text{ M}$ (2018) – (+\,258\%).
  • Domestic tourists: ~50 M (2019) journeys.
  • Cultural-site visits: 1.6 M (2014) → 6.6 M (2018): (+\,317\%).
• Economic target: tourism GDP share $2.9\% \to 7\text{–}8\%$ by 2025 (pre-COVID aim). COVID-19 expected loss = $\$3.64\text{ bn}$ GDP; 880 k jobs at risk.
• Advantages: jobs, trade stimulus, infra, regional development, tax revenue, reduce emigration, cultural goodwill.
• Disadvantages: environmental degradation (Murree example), cultural dilution, social issues, leakage of profits abroad, seasonality, vulnerability to shocks.

Northern Natural Attractions (select)

• Kaghan / Naran – Saiful Maluk Lake 3211 m, Shogran, brown trout; Gujjar herders.
• Swat – rivers, orchards, Malam Jabba ski resort.
• Gilgit / Hunza – 2438 m lush valley, Baltit Fort, long-lived Ismaili population, polo, fruit.
• Skardu – gateway to K-2; season Apr-Oct.
• Chitral & Kalash valleys – unique pagan culture; Shandur polo festival.

Cultural Attractions Examples

• Archaeology: Mohenjo-daro, Harappa, Taxila.
• Historic: Khyber Pass, Badshahi Mosque, Shalimar Gardens, Makli tombs.
• Modern: Faisal Mosque, Parliament, Minar-e-Pakistan.

Call Centres – Emerging Tertiary Activity

• Definition: high-volume telephone service hubs (inbound & outbound) for booking, banking, insurance, data entry, tele-marketing.
• Govt policy: allow domestic & offshore 0800 numbers; PTCL provides connectivity; centres in Karachi, Lahore, Islamabad, etc.
• Employment potential: leverages low labour cost + English skills; however limited scale (urban only, computer-skilled workforce, automation).

Key Numerical & Statistical References

• Cotton textiles = $40\%$ industrial labour; $65\%$ exports; $8.5\%$ GDP.
• Industrial estates total $72$; Sindh $24$, Punjab $20$, KP $15$, Balochistan $10$.
• Pakistan produced $\approx8\,\text{Mt}$ fertiliser in $2018$ (21 plants).
• Sugar 2020-21 forecast >5.7\,\text{Mt} (+$50\,\text{kt}$ stock).
• Foreign tourists: $1.9\,\text{M}$ (2018) vs $0.53\,\text{M}$ (2010).
• Cultural-site visits up $317\%$ (2014-18).
• COVID tourism GDP loss estimate $\$3.64\,\text{bn}$.

Ethical, Social & Environmental Implications

• Child labour in football stitching & surgical instruments; int’l pressure reducing usage.
• Brick kilns & kilns’ pollution: health + landscape damage; need for environment & child-labour law enforcement.
• Industrial waste harming Karachi coastline; threat to mangroves & seafood safety.
• Sustainable industry must balance current production with future environmental stewardship and resource conservation.

Interconnections & Real-World Relevance

• Agro-based manufacturing (cotton, sugar, fertiliser) directly depends on sustainable agriculture & water supplies.
• Industrial zones & CPEC SEZs link infrastructure, foreign investment and policy consistency.
• Energy shortages illustrate need for diversified power (hydel, renewables) to sustain industry & reduce pollution.
• Tourism revival tied to national security, infrastructure, marketing, cultural preservation and environmental management.
• Call-centre growth reflects global service outsourcing trends, ICT development, and human-capital investment.