Unbalanced Theories

Unbalanced theories are based on the principal that it is not possible especially in a developing country that all sectors can grow simultaneously at the same rate. Therefore, developing nations must look to invest more heavily in strategic sectors. The growth  in specialized sectors will transfer to other sectors of the economy later. Since developing countries face deficiency of capital, they can not simultaneously invest in all sectors of the economy. Therefore, it is necessary that they choose few strategic sectors in which they can specialize.

These theories also suggest strong relationship between private sector and government. They have been criticized for giving way to inflation in the economy.

Balanced Theories

Balanced theories are based on the principal that growth should be sought in all sectors ofthe economy at the same level. Therefore, economic growth should be based on growth in all sector of the economy. These theories are thus termed as "Balanced Theories", which propose balanced growth achieved through growth in all sectors of the economy.

These theories suggest that size of the market is very small in developing economics. Moreover, these economies face dearth of entrepreneurs. Therefore, the role of the government is very crucial in countries where balanced theories are practiced.

Soil and Salinity Problems

When the upper layer of the soil leaves its place by wind or water, this creates the problem of "Soil Erosion". When the soil erosion is caused by wind, it is termed as "Wind Erosion". When the soil erosion is caused by excessive flood water damaging the upper surface of land, it is termed as Water Erosion". Soil Erosion decreases the fertility of land. In the worst case, it makes the land completely barren. Lands which have a grass cover are better protected against soil erosion than lands without grass. Each year, approximately 8000 hectares of land is damaged due to soil erosion.

When mineral salts dilute in the water, this creates the problem of "Water of Salinity". Lands where the composition of soil contains chemicals like sodium sulphate, magnesium chloride, magnesium sulphate etc, are more prone to salinity problems. Each year, a large part of agricultural land becomes victims to his problem.

Consumer Goods Industries

"Consumer goods industries comprise of goods which are used for consumption by final consumers".
Consumer goods are finished products. The buyers of these goods are final consumer. These goods are brought to the consumers through wholesalers and retailer. They are essential for the economy because they complement capital goods industries by consuming the industrial production.
Usually buyers of consumer goods are in much more quantity than for capital goods industries. The amount of substitutes is higher in consumer goods industries than in capital goods industries. The level of competition is much higher in consumer industries than in capital goods industries.

Major Consumer Good Industries of Pakistan are as follows:

• Cement Industry
• Confectionery Industry
• Fast Moving Consumer Goods Industry
• Hotel Industry
  

Increase In Employment

Developing countries usually suffer from unemployment. Many people are engaged with agriculture whereas; the supply of land is not enough to compensate every one for employment. Moreover, farmers growing seasonal crops remains unemployed off -season. The growth in industrial sector can provide employment opportunities to many people. Natural lands and fields are fixed but unlimited industries can be established provided there is enough investment available.

Reducing Cost of Doing Business

Investor all over the world are interested to find out cost of doing business in a particular country before investing in any country. They look for wages and utilities expenses to make an estimate of cost of doing business. Labor wage in Pakistan are low but utilities are much too expensive. In china, electricity is free. In Pakistan, electricity charges are exorbitant for commercial purpose and the recent increase in prices for gas will not make improve.Cost if doing business must decrease to attract foreign investment.

Critical Analysis of Quantity Theory of Money

In the following lines, Quantity theory of money is critically analyzed:

Analysis of Assumption in the theory:

Following are the assumptions upon which this theory is based:

• Quantity of money changes, but not the velocity of money, whereas; velocity of money also changes and brings the same result as if quantity of money changed.
• Quantity of money influences prices but the reverse is not true. In other words, quantity of money determines the level of prices. But, prices are affected by many other factors than just the quantity of money.
• Full employment prevails in the economy. This does not happen in the real world.
• Velocity of money remains constant which is not possible.