In general terms, the marked improvement in Pakistan's GDP over the last four years has been achieved by decreasing the role of the Government in the country's economy and promoting openness. Pakistan has initiated limited market economy reforms leading to an expansion of the private sector. Macroeconomic fundamentals have improved and poverty has declined from 40 percent (population living below the poverty line) in 2000 to what it was in the early 90s (34 percent 1991, 35 percent 2003). The spike in poverty in 2000 was caused by a severe drought. Agriculture is an important contributor to GDP, nearly identical to industry (23.3 percent and 23.5 percent respectively) so the drought had a disastrous impact on the rural population. The impact underscored the inability of the Government of Pakistan (GOP) to provide a safety net for the economy in a calamity. In spite of this, though, the GOP has made important gains recently as evident in the growth of GDP shown in the chart above. The country's progress toward economic reform was hurt by sanctions imposed against Pakistan by the United States in 1998. The economic sanctions were imposed after nuclear bomb tests were detected. Similar sanctions were imposed against India and were permanently removed (both countries) in 2001. This was followed by substantial foreign aid which also helped to propel GDP upward. Two-thirds of the population remains rural. And this segment is poor and consumes for the basic necessities only. The more affluent consumers live in the cities. And their shopping patterns are supported by an underdeveloped retail infrastructure. Retailing is fragmented and poorly organized. According to a report published by Global Information, Inc., the...

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