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Exports grew 10-fold in 30 years

February 01, 2013

ISLAMABAD, Jan 31: Pakistan’s exports grew 10-fold in 30 years, much less than 25-fold observed in the rest of South Asia, estimates a new World Bank’s comprehensive and detailed analysis of trade and specially exports performance of Pakistan in the last 10 years.

The most intense growth of the country’s exports was observed at the end of the 1980s and at beginning of the 1990s. The most recent period, however, is associated with a deceleration of export growth, points out the analysis.

While both imports and exports have been growing at the margin exports have rebounded at a slightly faster pace. The main products leading this recovery have been rice, textiles like men’s shirts of cotton, women’s apparel, petroleum oil and bed and bathroom linen, as well as cotton yarn.

Pakistan’s recent trade performance is one of stagnation, as indicated by a decrease in its trade-to-GDP ratio over the last decade. At the same time peer countries have leapfrogged with high growth rates.

Pakistan’s position below the predicted line indicates that it “under-trades” compared to smaller countries at comparable levels of per capita income.

Pakistan’s average trade-to-GDP ratio for the period 2007-09 was smaller than what it was a decade earlier (1997-99), in contrast to the shares of its peers. In 1997-99, Pakistan’s trade-to-GDP ratio was as high as China’s, and much higher than India’s. Ten years on, shares of both China and India almost doubled while Pakistan’s fell.

Geographically, the EU and the US represent the most important destinations of Pakistan’s exports. The US and European markets absorb 31 percent and 23 percent of Pakistan’s total exports. China represents the third most important destinations, with an 11.5 percent share. UAE, Afghanistan, Oman and Turkey have recently become important destinations.

Pakistan appears to be still under-exporting with the large and fast growing economies of the 21st Century. Pakistan’s exports to Japan, Brazil, Russia, and India with which ties are fraught with political relations, are below.

In South Asia, Pakistan’s exports to Sri Lanka have grown in response to a bilateral trade agreement in place. Pakistan trades heavily with members of the Gulf Cooperation Council (GCC).

In terms of quality and sophistication, the analysis notes that the technological content of exports in Pakistan is low. High-tech exports constituted less than two per cent in 2008, a share broadly unchanged in the past 25 years. This is extremely low for a country which has good educational and research institutions, and a large population.

Over the last decade, Pakistan has upgraded the export quality of the differentiated products. This can be seen by the increase in the mean unit value and by the increase in the standard deviations between 2000 and 2007. For some products this quality upgrading, though, has taken place at a slower pace than the average quality upgrading by world exporters.

The analysis also showed that there are problems of quality and sophistication in the export basket of the country. The sophistication of Pakistan’s export basket is low and has increased at a very slow pace, mainly when compared to China and India. The product space analysis showed that there were 103 products with an RCA greater than 1 in both 1993 and 2008.