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Exports for revival of Pakistan's economy

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By Prof. Dr. Khawaja Amjad Saeed
Dec  13 - 19, 1999

Pakistan is passing through a very critical juncture of its history. Our inward remittances from expatriates are at the lowest level. Foreign direct Investment has registered a consistent decline. Cotton production has been volatile. We continue to import wheat to feed our inhabitants. Yields in agriculture are low-yeaming for improvement. Current Account deficits have existed since we were born. Fiscal deficits have been a regular feature of our economy. Unemployment has yet to be tackled. Education needs to be given a national priority. Economic problems need to be addressed on war footing. We certainly need to merge lot of ministries but the crying need is to establish an Economic War Ministry so that the task of economic revival is seriously addressed and rather than giving a lip service we start rehabilitating the sick and weak economy and turn it in an excellent healthy state for the prosperity of downtrodden impoverished and poverty stricken strata of our society. The present set up in our country appears to be serious to address the foregoing issues. A seven-point strategy has been announced by the Chief Executive. This is a good announcement which stresses revival of Pakistan's Economy. The points is: From Where to Start?

Export led strategy

Export led strategy be worked out and all the stakeholders must put in their sustained efforts to ensure a rising curve of exports. Several Far Eastern Countries have exhibited their success in economic revival by following export led growth as a strategy.

This piece looks at global exports, presents an analysis of selected major regional groupings and includes an analysis of Pakistan's export performance for 1998-99. It ends up with a nine point suggested strategy to boost exports from Pakistan.

Global exports

In August, 1999 World Development Report 1999-2000 was released. This has been used as a basic book of information to analyze global exports. This contains data in respect of 132 Countries. Based on our research, the following points represent major conclusions:

1. Global exports for 1998 were $ 5,415 billion. There was a high concentration of exports in high income economies. Fifteen Countries namely US (18%), Germany (14%), Japan (10%), France (8%), UK (7%), Italy (6%), Canada (5%), Netherlands (5%), China (5%), Hong Kong (5%), Belgium (5%), Korea, Rep (3%), Singapore (3%), Mexico (3%), Spain (3%) represented 71% of global exports.

2. Pareto Law was more than applicable. Eleven percent countries accounted for seventy one percentage in dollar value and eighty nine countries shared twenty nine percentage in dollar value. A new era of less concentration of exports in few country is the clarion call of today.

3. Amongst the top world leaders in exports, US was number one, Germany was ranked as number two. Japan bagged the third position. France ranked at number four and UK was positioned at number five.

Regional groupings

Several regional groupings are found in the world. This piece examines four regional groupings. These include the following:

1. NAFTA : North American Free Trade Area

2. G-8 : US, Germany, Japan, France, UK, Italy, Canada and Russian


3. D-8 : Malaysia, Indonesia, Turkey, Iran, Nigeria, Pakistan, Egypt and Bangladesh

4. SMRC : India, Pakistan, Sri Lanka, Bangladesh, Nepal, Maldives and Bhuttan

Each of the above regional groups is briefly reviewed below:


NAFTA is registering a steady increase in the share of global exports. In 1995 its share in global exports was 16.66% and this increased to 18.74% in 1998 as reported in the World Development Report 1999-2000. Overall position of NAFTA is given in Table 1:

NAFTA Exports - 1998

Country US $ Billion %

1. United States 683 67

2. Canada 214 21

3. Mexico 118 12

1,015 100

Global Exports 5,415 1,874

Source: Computed from World Development Report 1999-2000, New York: Oxford University Press, August 1999, Table 20, pp 268-269.

With developments in Information Technology (IT) business in US and Canada, NAFTA will continue to grow in future.

G -8

G-8 was popularly known as G-7. However, after the inclusion of Russian Federation it became G-8. Its share in global exports was 50% in 1995 and it was the same in 1998. Their dominance is so great that only eight countries of G-8 represent 50% of global exports. Due to a well knit group and with sustained growth, G-8 is likely to register further growth in future. Their overall position is given in

G-8 EXDOrS - 1998

Countnt US$ Billion %

1. United States 683 25

2. Germany 540 20

3. Japan 388 14

4. France 307 11

5. United Kingdom 273 10

6. Italy 241 9

7. Canada 214 8

8. Russian Federation 74 3

2,720 100

Global Exports 5,415 50

Source: Computed from World DeveloDment Report 1999-2000, New York: Oxford University Press, August 1999, Table 20, pp 268-269.


D-8 has been set up at the initiative of selected Muslim Countries. The shared view has been to cooperate between each other and grow in export arena. Although their exports increased in absolute figures, yet its share in global exports declined to 3.45% in 1998 compared to 3.58% in 1995. Their export performance in 1998 is given in Table 3:

D-8 EXDOrtS - 1998

Country US $ Billion %

1. Malaysia 73 39

2. Indonesia 49 26

3. Turkey 26 14

4. Iran 13 7

5. Nigeria 10 5

6. Pakistan 8 4

7. Egypt 4 3

8. Bangladesh 4 2

187 100

Source: Computed from World DeveloDment ReDort 1999-2000, New York: Oxford University Press, August 1999, Table 20, pp 268-269.


Exports of Nepal, Maldives and Bhutan totaled together constitute less than one billion US $. Export performance of the other four SMRC Countries is tabulated below:

SAARC EXPOrtS - 1998

Country US $ Billion %

1. India 33 66

2. Pakistan 8 16

3. Sri Lanka 5 10

4. Bangladesh 4 8

50 100

Global Exports 5,415 0.92

Source: Computed from World Development Report 1999-2000, New York: Oxford University Press, August 1999, Table 20, pp 268-269.

SMRC share in global exports was 0.92% in 1998. It marginally rose from 0.89% in the last two previous years. SMRC population of the world is 21%. Therefore it is apparent that vast scope exists in registering an increase in exports in South Asian region.

Exports from pakistan

Share of Pakistan in World Export was 0.15 in 1998. This share was 0.18 in 1995 and 0.20 in 1992. It is quite obvious that, whereas the global exports are rising over time, the share of exports of Pakistan continues to be also rising but on declining trend.

There are four major commodity groups which accounted for 83% of her total exports during 1998-99. These included Cotton (59%), Leather (9%), Synthetic Textiles (7%), Rice (6%), Sports Goods (4%). There is, therefore, a need to increase diversification to ensure less impact of vulnerability to adverse circumstances at home and abroad.

Only nine products constituted 65% of her total exports. These included ready made garments, cotton cloth, cotton yarn, rice, synthetic textiles, sports goods, carpets and rugs, leather and fish and fish preparations.

Exports of the above products was above Rs. 5 billion. Vast scope exists in ensure increase in export of these products which deserve strategic focus by all the stakeholders.

Destination analysis of exports of Pakistan is presented in

Destinations of Pakistan's exports

(July- March, 1998-1999)

Countries %

1. Developed Countries (OECD) 60

2. Developing Countries 40*


Developing Countries

1. OIC 12

2. Other Asian Countries 12

3. SAARC 6

4. Others 6

5. ASEAN 3

6. Central Asian Countries 1


Source: Economic Survey 1998-99 (Statistical Appendix), P. 179.

Our Foreign Ounces should be persuaded to switch to economic roles over and above diplomatic ones and ensure sound, stable and sustainable ties with OECD Countries to result into a rising curve of exports. Special and interactive relationship with Organization of Islamic Countries (OIC) an push the export curve to rise. A breakthrough in SAARC an result into a signifiant increase in exports amongst themselves. ASEAN Countries are coming out of recession. These can be considered as hopeful destinations of exports in future. Hardly any tangible gains have been achieved in increasing our exports to Central Asian Countries which represented only t% of Pakistan's Exports.

There is a vast scope to expand Pakistan's exports to several countries. Only 53% of Pakistan's exports were to seven Countries namely, USA (21%), Hong Kong (7%), UK (7%), Germany (6%), Dubai (5%), Japan (4%) and Saudi Arabia (3%).

Pakistan needs to follow a strategy to ensure a breakthrough in exports. Suggested strategy to be considered and followed is tabulated below:

Boosting exports: Nine points strategy for Pakistan

Particulars Focus

1. Priority For quantum Jump

2. Global Share Programmed Increase

3. Regional Setting SMRC

* SAPTA - On going

* SAFTA 2001-02

* Economic Union - 2008

* Global Share

4. Niche Market Fish

5. Exportable Surplus Single Factor

6. Diversifiation Dimensions * Commodities

* Countries

7. Export Expansion of Products and * Ready Made Garments

direction * Value Addition

* ISO 9000

* Quality

8. New Breed of Exporters HRD

9. Export Culture Development War Footing

The athor is Dean: Executive Programs, punjab College of Business Administration, contitutent College of Mohammad Ali Jinnah University.

president, Institute of Cost and Management accountants of pakistan' Member Gvoerning Cuncil, International Federation of Accountants.