The Afghanistan conflict is further internationalized when the United States channels massive supplies of arms to the mujahideen via Pakistan's Interagency Intelligence Services (ISI).
This program includes renewed U.S. aid to Pakistan of $4.2 billion for the years 1987 to 1992.
By the close of the 1980s, as many as 3.5 million Afghan refugees have arrived in the country.
During the 1980s, the Pakistani government announces a movement toward an "Islamic economy".
This movement involves the purging of economic practices outlawed by Muslim theology, such as riba (interest), the mandatory reinstatement of the zakat (an annual tax on several types of personal financial assets that is used to provide aid for the poor), and the ushr (the zakat on land), which has not been universally adhered to but remain some of the central tenets of Islamic law.
The judicial system also begins a reorientation to Islamic tenets and values designed to make legal redress inexpensive and accessible to all persons.
A complete code of Islamic laws is instituted, and the Federal Shariat Court, a court of Islamic law (Shari'ah), was set up in the 1980s.
General Zia promises further Islamization of the economy, but he dies before these steps can be taken.
Under Benazir Bhutto, his successor, the Islamization movement slows, although the government is obliged to keep on the books most of the legislation enacted during the Zia period.
Labor union activity, severely constrained by Zia's military government of 1977-88, is revived by the administration of Benazir Bhutto.
In the early 1990s, under Bhutto's successor, Mian Nawaz Sharif, the sharia is proclaimed the basic law of the land.
Zia's proposals to end the potential nuclear arms race on the subcontinent are still on the table in the early 1990s, and are supplemented by Sharif's call for a roundtable discussion among Pakistan, India, the United States, Russia, and China on nuclear weapons in South Asia.
The regimes of Zulfikar Ali Bhutto, Zia ul-Haq, and Benazir Bhutto have given family planning a relatively low priority.
Consequently, Pakistan's total fertility and population growth rates are among the highest in the world.
The rate of population growth has increased from less than 2 percent in the decade following independence to slightly more than 3 percent in the 1980s.
From early on, one of the prime objectives of agricultural development programs has been self-sufficiency in wheat, which Pakistan achieves in the early 1970s.
Nevertheless, Pakistan still has to import a large proportion of the capital equipment and raw materials required by industry.
Wheat yields remain low by international standards, but increasing amounts are processed locally; in addition, much of Pakistan's edible oil is produced from cottonseed.
Rice is the second major food staple and one of the country's important export crops.
By the end of the 1980s, Pakistan has become the third largest exporter of rice in the world, after the United States and Thailand.
Large domestic sugar subsidies are the main cause for the increase in sugarcane production.
In the overpopulated and poor districts of the Punjab's barani region, which do not benefit from irrigation, holdings are exceedingly small and fragmented.
In these districts, there is a great pressure to migrate from the villages to find employment in towns or in the armed forces.
These districts were the source of most of the migrants (largely men) who went from Pakistan to the Middle East during the 1970s and '80s to take advantage of the economic boom resulting from the increase in the price of oil.
Oil fulfills a substantial portion of Pakistan's energy requirements, and the search for new and richer fields continues.
A number of smaller natural gas fields are discovered in the 1980s.
Pakistan now operates a mixed economy in which the state-owned enterprises (including industrial corporations, trading houses, banks, insurance companies, institutions of higher learning, medical schools and hospitals, and transport companies) account for nearly half of the gross national product (GNP).
In addition, the state, with the help of an intricate system of industrial licensing and trade regulations, controls new private investments.
The state also has at its disposal labor, health, and tax laws to oversee the functioning of the private sector.
Taxation accounts for more than three-quarters of government revenue; government expenditures exceed revenues by a large amount.
Income tax rates have been comparatively high, but the tax base has been so small that individual and corporate income tax revenues have remained substantially less than excise, sales, and other indirect taxes.
The government has been able to maintain heavy expenditure on development and defense because of the inflow of foreign aid and the remittances sent by Pakistanis working abroad.
In the 1970s and '80s, external capital inflows were equivalent to as much as one-tenth of the GNP and financed well over half of the total domestic investment.
In allowing this dependence on foreign capital to persist, however, the country has accumulated an enormous foreign debt, the financing of which has been a major problem.
The late 1980s see a tremendous increase in the manufacture, use, and export of narcotics.
The Afghanistan-Pakistan borderland is calculated to be the world's major source of heroin.
Annual production of opium is said to exceed 200 tons in some years, and it is estimated that as many as one million people are addicted to heroin.
In the early 1990s, the limitations of the transportation system emerge as a major constraint on the modernization of the economy, prompting the government to undertake large-scale investments in the highway sector.
Private entrepreneurs are also invited to participate in a "build-operate-transfer" (BOT) approach, which has become popular in developing countries.
(In the BOT system, private entrepreneurs build and operate infrastructure facilities such as ports, highways, and power plants and then recover their costs by charging tariffs from the users.
Once the investors have recovered their outlay, the facility created is transferred to the government.)
