The present article analyses the development and major causes of the economic disparities between East and West Pakistan, which were a major determinant of the secession of Bangladesh. Disparity in real per capita incomes increased from roughly 25 per cent in 1949/50 to 45 per cent in 1969/70. It is argued that this development was due to two main factors, namely 1. the more favourable position of West Pakistan at the time of independence of Pakistan and the resulting circular and cumulative effects and 2. government policies, in particular with regard to the regional allocation of development and non-development expenditure, foreign exchange earnings and foreign aid. The analysis of foreign and interregional trade reveals that a net transfer of real resources from East to West Pakistan amounting to 8—9 per cent of East Pakistan’s income took place. Government allocation policies can partly be explained by the desire to maximize GNP growth and the assumption of a considerably higher capital-output ratio (or a very restricted absorptive capacity) in East Pakistan; however, political factors like the dominance of West Pakistanis in the Central Government, the military and the civil service seem to have played a more crucial role.