Pakistan’s export performance has been poor over the last two decades due to slow growth. In 2003, Pakistan’s total exports amounted to 11.93 billion dollars, while Bangladesh’s exports were 6.43 billion dollars, India’s exports were 59.36 billion dollars, and Vietnam’s exports were 20.14 billion dollars.
With an average annual growth rate of 5.8%, Pakistan’s exports were worth 31.17 billion dollars, while Bangladesh’s exports, with an average annual growth rate of over 12.37% in the same period, were worth 65.97 billion dollars.
Vietnam’s exports reached $469.5 billion with an annual growth rate of over 17% in the ten-year period from 2003 to 2023. The average growth rate of Pakistani exports has failed to compete with rivals that have demonstrated significant growth in export rates over the last two decades.
Why are our exports still struggling to achieve meaningful growth?—I
Slow export growth rates over the past two decades have hindered Pakistan’s share of total world exports over the same period.
While Pakistan’s export shares have witnessed an average growth rate of just 0.25%, Bangladesh, India and Vietnam have managed to increase their share in global exports at an average annual rate of 0.40%, 3.2% and 2% over the last two decades.
Pakistan has a very narrow export base with a large share of resource-based raw agricultural products exceeding their useful age without adding any value for the last few decades.
There were low and unsustainable export gains due to favorable international prices or overproduction.
However, regional rivals are shifting their export base from primary and raw goods to value-added items, particularly recording remarkable growth in their share of global exports.
In 1998, Pakistan’s per capita exports were 70 dollars, Bangladesh’s 47 dollars, and India’s per capita exports were only 45 dollars.
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However, in 2022, India’s per capita exports increased to 536.23 dollars, Bangladesh’s per capita exports increased to 246.31 dollars, and Pakistan’s per capita exports increased to 167.13 dollars.
Pakistan’s exports have remained stagnant for a very long time and have not witnessed a significant increase for two decades.
The private sector in Pakistan faces several challenges, including the complexity of the business regime, lack of access to adequate financing, lack of competitiveness, little product diversity, and lack of reliable and affordable energy.
These problems had serious consequences in both exports and domestic consumption.
Moreover, since a large percentage of industrial production is consumed domestically, the share of exports in GDP is shrinking at an alarming rate.
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Pakistan’s exports are dominated by low-tech and raw products, which account for more than 85% of total export earnings; This is one of the main reasons for Pakistan’s low export earnings and export growth.
52% of Pakistan’s exports consist of textiles, ready-made clothing and cotton. In 2022, the total value of cotton, ready-made clothing and textile products exports was over 18.12 billion.
In 2022, 18 percent of Pakistan’s total exports will be textile products and 19 percent will be ready-made clothing products, while the share of cotton exports decreased to 10 percent.
This was attributed primarily to declining productivity due to inadequate investment in research and development, insufficient product and market diversity, weak value added and innovation.
While Pakistan exports the same goods it did 50 years ago, regional competitors have successfully diversified their industries with international demand and diversified their exports into higher value-added goods.
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Firms are less inclined to invest in research and development as tariff policy is biased against exports and grapples with one of the highest levels of protection for domestic industries, resulting in import substitution rather than export substitution.
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