Pakistan’s export performance has remained meager in the past two decades due to sluggish growth. In 2003, the total exports of Pakistan amounted to $11.93 billion, compared to Bangladesh whose exports amounted to $6.43 billion, India at a whopping $59.36 billion and Vietnam had exports worth $20.14 billion.
With an annual average growth rate of 5.8%, Pakistan’s exports are worth $31.17 billion as compared to Bangladesh’s $65.97 billion that has witnessed an average annual growth rate of more than 12.37% in the same period.
Vietnam’s exports experienced an annual growth rate of more than 17% to $469.5 billion during the ten-year period – 2003-2023. The average growth rate of Pakistani exports have not been able to compete with those competitors that have exhibited substantial growth in their export rate over the last two decades.
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The sluggish export growth rates in the past two decades have hindered Pakistan’s share in total world exports in the same period.
Pakistan’s export shares witnessed an average growth rate of a mere 0.25% whereas Bangladesh, Indian and Vietnam were able to grow their shares in global exports by an average 0.40%, 3.2% and 2% annually over the last two decades.
Pakistan has a rather narrow export base with a large share of resource-based raw agricultural items over the last few decades that have surpassed their beneficial age without adding any value.
Due to favorable international prices or surplus production, there have been low and unsustainable export gains.
However, regional competitors are transforming their export base from primary and raw commodities to value-added items especially that has achieved remarkable growth in its share of global exports.
The per capita exports of Pakistan in 1998 amounted to $70, Bangladesh at $47 and India had exports worth a mere $45 per capita.
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However, in 2022, per capita export of India grew to become $536.23, Bangladesh rose to $246.31 while Pakistan’s per capita rate came in at $167.13.
Pakistani exports have remained stagnant for too long and have not witnessed significant growth over the course of two decades.
The private sector in Pakistan has been facing several challenges, including complexity of the business regime, lack of access to adequate finances, lack of competitiveness, little product diversification and unavailability of reliable and affordable energy.
These issues have resulted in dire consequences for both exports and domestic consumption.
Additionally, a big percentage of industrial production is consumed domestically hence the share of exports in the GDP is shrinking alarmingly.
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Pakistan’s exports are dominated by low-tech and raw products that account for more than 85% of its total export earnings, one of the major reasons for low export earnings and export growth of Pakistan.
52% of the Pakistan’s exports are made up of textiles – apparel and cotton. In 2022, total exports of cotton, apparel and textile products were valued at more than 18.12 billion.
In 2022, 18% of total exports of Pakistan comprised of textile products, more than 19% were apparel products and the share of cotton export shunk to 10%.
This was attributed to reduced productivity, inadequate product and market diversification, poor value addition and innovation primarily due to inadequate investment in research and development.
Pakistan is exporting the same commodities that it used to export 50 years ago, while regional competitors have successfully diversified their industries with the international demand and have diversified their exports with higher value-added commodities.
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Firms are not inclined to invest in research and development since there exist anti-export bias within the tariff policy and is plagued with one of the highest levels of protection to the domestic industries that results in import substitution rather than substituting exports.
The article does not necessarily reflect the opinion of Business Recorder or its owners
The writer is Director Research and Development at SAARC Chamber of Commerce and Industry
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