News
Monday, May 12, 2008
Experts diagnose ailments of Pakistan’s export trade
* Pak economy replete with missed opportunities: Parvez Hasan
* Regional trade essential to re-structuring: BurkiBy Khalid Hasan
WASHINGTON: Pakistan’s export-driven trade regime is frequently undermined by poor export performance because it cannot always offer products the world wants, and the ones it offers are either not in demand or are shut out of markets by competition, according to a panel of experts. Their findings appear in a report entitled ‘Hard Sell: attaining Pakistani competitiveness in global trade’ published by the Woodrow Wilson International Centre for Scholars. The report is based on papers presented at a conference held here in June 2007 under the aegis of the Woodrow Wilson Centre and the Karachi-based Fellowship Fund for Pakistan. In an introduction to the 224-page report Michael Kugelman of the centre writes, “Even as the world seeks sleek, modern technology and hungers for services, Pakistan remains mired in a virtual mono-export rut that dates to the 1950s. Though some authors agree that Pakistan’s textile industry is too important to abandon — and some insist that measures must be taken to keep it strong — the implication emerging from this volume is that Pakistanan’s future economic growth hinges on its ability to diversify its exports — in terms of both products and destinations — and to make them more competitive.” He believes that the required improvements will need major investments in skills training and, by extension, education. Mirza Qamar Beg, a former civil servant and ambassador, is doubtful about the ability of a free trade agreement or Free Trade Area-driven market access to generate sufficient trade, as Pakistan’s gains would be minimal with smaller economies and unlikely with larger ones. Missed: Parvez Hasan, a former chief economist at the World Bank, after reviewing Pakistan’s export history argues that it is defined by major missed opportunities in export development. Crucially, Pakistan has not exploited opportunities in the global manufactured goods trade. From 1980 to 2005, major developing countries on the whole demonstrated dramatic growth, increasing their market share of global trade manufactured exports from 8.6 percent to 30.5 percent. However, by 2005, Pakistan had garnered only a 0.18 percent share of this market, a considerably smaller portion than many of its developing world competitors including China and the East Asian countries. Pakistan, Hasan argues, has been cursed by its historic dependence on textile exports. The nation has simply been unable to take advantage of global market demand for modern, high-tech manufactured products. Burki: Shahid Javed Burki, another economist, argues that more regional trade would give Pakistani economy a much-needed restructuring. He believes that taking advantage of South Asia Free Trade Area would be the best way to address the distortions in the structure of Pakistani trade. He projects that if SAFTA were implemented successfully, Pakistan’s total trade would increase at a rate of 10 to 12 percent per year for the next 10 years. With new export markets across South Asia, Pakistan’s agricultural, banking and services sectors would be revitalized and provide more value-added products than at present. With transit trade garnering more foreign exchange, Pakistan’s transport sector would be modernised. Its hotel, restaurant and entertainment industries, buoyed by tourism, would flourish. Pakistan would be transformed from a nation of few and frequently uncompetitive exports into one boasting a diverse and competitive export portfolio. According to Ijaz Nabi of the World Bank and Zareen Naqvi, a Canadian academic, Pakistan-India trade may be moving towards a “higher trajectory”. They estimate that at best the two nations are exploiting only a third to a tenth of the potential that exists for bilateral trade. Lahore could become a trade hub for towns along India’s northern border. Meanwhile, Peshawar and other towns in the Balochistan would gain substantially if Pakistan allowed land transit facilities to India for trade with Afghanistan, Central Asia and the Gulf.
Courtesy Daily Times