ISLAMABAD: As the country’s exports’ value has remained stagnant for over a decade due to having concentrated largely in traditional sectors, a study suggested the policy makers to diversify the exports product base besides targeting industries with large global exports wallets, which are in advanced manufacturing products.
The report jointly conducted by the Planning Commission and Pakistan Institute of Development Economics (PIDE) took data from 1,321 firms based on their audited financials spanning from 2010 to 2020 to get a firm-level Total Factor Productivity (TFP) estimates.
Most of the firms are in the manufacturing sector in the sample of 1,321 firms. In manufacturing, most of the firms are in the textile sector while in the services sector, the insurance sector has the highest number of firms amounting to 81, followed by the finance and banking sector, which has 73 firms.
The firms included in the analysis have a reasonably large coverage of Pakistan’s economy as the total sales of 1,321 firms are 28 percent of the GDP while materials used by these firms are 20 percent of the GDP and the labor employed in these firms exceeded 2 million.
The report also showed the top global exporting sectors along with their shares in respective total global exports and Pakistan’s top exports with their share in the total exports.
It is evident from report that not many of Pakistan’s top export sectors figure in the top global export sectors. The top global exports are in the electrical equipment and machinery sectors, whereas Pakistan’s top exports are in the textile and allied sectors, amounting to US$4.08 billion.
Moreover, the top global exports consist of high-tech products, which require research and development (R&D) and innovation. Other than that, top global exports also feature high-precision products, such as optical and related products.
In comparison, Pakistan’s top exports, unsurprisingly feature textile products. Pakistan also exports optical, cinematographic and other related products but these only amounted to $0.37 billion and had only a 2 percent share in Pakistan’s total exports.
It is important to note that Pakistan also exports agricultural and related products (for example, meat, seafood, cotton, and cereals), whereas the top 15 global exports do not feature such products, the report added.
It said the growth of productivity is a crucial determinant of an economy’s growth that has to be pushed higher to over 3% to achieve the targets of raising the country’s Gross Domestic Product (GDP) to over 7-8% on a sustainable basis.
The report titled “Sectoral Total Factor Productivity in Pakistan,”showed that in Pakistan, average productivity growth has been 1.5% from 2010-2020. However, 1.5% productivity growth is not enough if Pakistan wants to achieve GDP growth of around 7-8 percent.
