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ration in the quality of products has adversely affected imports.

Increase in the sick industrial units

The number of sick industrial units, mainly due to nationalization of industries has bone up. It is on record that the performance of most of the industries in the public sector is not satisfactory. The decline in production of semi-manufactured goods reduces due to which Pakistan is dependent upon imports for meet its local demand for goods and services.

Less production of value added goods

The value added by industry is hovering round 25.43% as of 2010. The share of value added goods must increase to make Pakistan self sufficient and less reliant on imports and turn the trend of adverse balance of trade.

Devaluation

The repeated devaluation of rupee against USA dollar has not helped to decrease export. It made the imported inputs more costly. So the policy of devaluation is not suitable for our country.

Corrective Measures

Negative Balance of trade is unfavorable for everyone in the economy, from the view point of domestic producers. Global trade is good for some people & terrible for others.

Import of essential items

Only essential items should be imported which are needed for our industrial production. import of luxuries should be banned. People should be educated to come out of complex of foreign goods.

Exchange control

Exchange control should be followed, so that there is no wastage of foreign exchange.

Substitute for imported items

Import substitutes should be manufactured in the country e.g. if home production of fertilizer, paper, steel, edible oil and electrical goods is increased, there will be less need for such imports.

Decrease in Consumption

Taxes should b imposed to reduce the consumption of many items. Rich people in our country are spending lavishly on unnecessary consumption items. So foreign exchange is wasted.

Control of Smuggling

Bara market should be eliminated. After atomic explosion the govt. is taking strict measure to eliminate markets of smuggling goods.

Population control

Many of our problems are arising due to fast increase in population. Sincere efforts should be made to decrease growth rate of population. People should be educated in this regard.

Labour intensive industries

Labour intensive industries should be established, because labour is cheaper in Pakistan, these industries can be set up at lower cost. The products of these industries can meet the demand.

Increase in Import Duties

Increase in import duties will make imported products expensive for the importers and hence they will reduce the demand for imported commodities which will also decrease the amount of net imports.

Attitude of people

People should change their attitude towards consuming imported commodities and they should purchase local products so that the local industries can flourish and the net imports could be reduced.

Methodology

In this study the following OLS model will be used:

Where:

Y means total imports.

X1 means oil imports.

X2 means commercial servic