pacts of law and order situation on economy By Arbab Tehmas Khan Impacts of law and order situation on economy:-Pakissan.comEconomy always follows politics and politics remains the byproduct of law and order situation prevails in a country. If law and order situation runs smoothly, the politics play smoothly and therefore the stable economy of the country - universal truth. The law and order situation arises when there is insecurity, threat of violence or violence arising due to a host of factors disturbing the ordinary conduct of life and businesses in a society. It may be a product of one or more of the following: Factors/components: External aggression Internal upheavals Religious/sectarian extremism Labor unions\' strikes, boycotts, lock outs, and similar activities Ethnic/racial/linguistic cleavages Economy fact sheet Pakistan: Decades of internal political disputes and low levels of foreign investment have led to slow growth and underdevelopment in Pakistan. (CIA Facts Sheets-Pakistan) Agriculture accounts for more than one-fifth of output and two-fifths of employment. Textiles account for most of Pakistan\'s export earnings, and Pakistan\'s failure to expand a viable export base for other manufactures has left the country vulnerable to shifts in world demand. Official unemployment is 6%, but this fails to capture the true picture, because much of the economy is informal and underemployment remains high. Over the past few years, low growth and high inflation, led by a spurt in food prices, have increased the amount of poverty - The UN Human Development Report estimated poverty in 2011 at almost 50% of the population. Inflation has worsened the situation, climbing from 7.7% in 2007 to more than 13% for 2011, before declining to 9.3% at year-end. As a result of political and economic instability, the Pakistani rupee has depreciated more than 40% since 2007. (UN Human Development Report, 2011) The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis. (International Monetary Fund, 2008). Economic growth and recommendations: Selective macroeconomic indicators to determine the state and growth of economy like GDP growth rate, poverty incidence, and per capita income growth rate over a specific period of time, and level and nature of investment. To control rise of inflation, the administration should take initiatives for enabling consumers to form their effective consumer associations supplementing already in place monitoring mechanisms. Despite very high inflation, the possibility of reducing the discount rate by further 1-2 percentage point may be explored at operational so that the costs of borrowing from the banks are reduced. During the period of economic problems, the government should take the lead and start more public investments to provide a jump start to the economic activities. Primarily, it is the domestic investors who have to be encouraged and motivated to take the lead for the investment. The administration of governmental incentives to them should be more business-friendly. Once, domestic investors start flourishing, it will encourage foreigners to invest in Pakistan as well. There is a need to improve business environment in the country, including the availability of educated and skilled manpower, ancillary industries and utility services. Continuous rise in the prices of petroleum products, electricity, gas and other utilities are also adversely affecting the business environment..