LAHORE, May 27: The State Bank governor Dr Ishrat Husain has said that Pakistan integration into global markets is in its larger economic interest.
He was addressing a seminar on export-led growth strategy of the Export Promotion Bureau at the Pakistan Administrative Staff College here on Tuesday.
He said that the integration would offer the best potential for the country to achieve rapid growth and poverty reduction compared to reliance on domestic markets.
He was answering one of the four questions he had himself put in his paper on Pakistan’s exports competitiveness in global markets.
The questions were: (1) Why should Pakistan integrate into global markets? Why can’t we rely on our own domestic market of 145 million people? (2) If we decide to integrate, this will involve opening up our country to products from other countries and de-protect our industry. Won’t this lead to de-industrialization of Pakistan. (3) Pakistan has a weak, narrow and inefficient industrial base. How can our industry compete with countries such as China, India, Thailand etc?, (4) What are the competitive advantages of Pakistan upon which we can build and accelerate our export growth?
He said that enhancing the share in the ever enlarging pie of world markets would put Pakistan on fast track which was hard to achieve by relying on domestic economy as the engine of growth. “If we depend on domestic markets we won’t be able to generate the foreign exchange needed to import raw materials, components and machinery for the industry and pay for petroleum products to keep our transport, railways, electricity and other economic activities running.
He said that even if Pakistan kept on borrowing from external creditors it would not have sufficient foreign currency to repay them. Thus whoever looks inward for growth and poverty reduction was sadly mistaken and suffered from romantic idealism rather than practical realities.
Replying to other questions the SBP governor said that the fears about de-industrialization resulting from integration and liberalization were unfounded and misplaced. Pakistan enjoys competitive advantage in several products which were fast growing in the global markets and have potential of high demand. He said that Pakistan’s export competitiveness could not be left to the whims of market forces alone instead it should be managed strategically.
Citing the example of South Korea he said that 50 years ago South Korea elected to trade with the world and open up its economy while North Korea had chosen the path of protectionism and closing the economy to the outside world.
Today per capita income in South Korea was $19,400 while in North Korea it was $1000 only.
Addressing the first session the WHO director Dr Clemens Boonekamp discussed the role of the WTO and its benefits to the developing countries.
During the second session International trade centre’s chief market analyst Dr Friedrich Von Kirchback analysed Pakistan’s performance in the global market and said that EPB was well on the way of developing a realistic roadmap for economic growth.
Gherazi Textile Organisation’s Keith Stuart-Smith discussed the post-textile quota scenario and emerging opportunities of liberal trade while addressing the third session of the seminar.