Any country that wants to pursue an export-driven model for economic growth first needs to improve its political relationship with other economies in the region.
Unfortunately, Pakistan has so far remained unsuccessful on this front to exploit the benefits of its geographical positioning. This can be gauged from the fact that the names of only few regional economies are present on the list of its top 20 export destinations.
Lately, trade proposal presented by Pakistan-Russia Business Council that draws attention towards promoting bilateral trade is a good step in this regard. The initiative provides a platform to increase the presence of indigenous products in Russias gigantic and fast growing import market, which reached $267 billion in 2008, according to Federal State Statistics Service of Russia, after expanding seven times in the last decade.
At present, Pakistans exports to this market are very disappointing, a meager $100 million, with major portion of the bill tilted towards exports of cotton cloth. Prudence, however, requires product diversification, as Russian import structure reflects great potential for Pakistani exports in the area of food items, agriculture, chemical products, metal, precious stones etc.
But sales to Russia and central Asia face three potential barriers.
First, to penetrate that market, domestic producers will need to put extra efforts to reduce the cost of manufacturing as other low cost producing Asian countries can make products from Pakistan uncompetitive in Russian bazaars.
Second, trade picture can not become rosy until major countries in this region join hands and resolve issues that have been hampering the development of trade routes. Pakistans land trade route with Russia passes through Afghanistan and Central Asia - a region marked by war against terror and years of other tribal or religion-based skirmishes.
Lastly, even if peace comes to the region, enhancing trade and economic ties with Russia will be a tricky business considering that ties between the former communist country and the United States are still not warm.
This means that for Pakistan, strengthening economic entanglement with Russia might mean risking relations with the U.S; hence bilateral trade may face the same sort of hindrances and delays as the gas deal between Iran and Pakistan.
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