Pakistan's exports have surged during the ten months of the current fiscal year and in the previous fiscal year (2002-03), after a long period of stagnation.

From 1995-96 to 2001-02 Pakistan's exports had only increased by $830 million whereas in 2002-03 they rose by about $2 billion and in the last ten months they have further climbed by $1.2 billion.

Hence there has been more than 30 per cent increase during last 22 months. The Minister for Commerce deserves all the accolades for this tremendous turnaround. However, although Pakistan accounts for more than 2 per cent of world population, its share in global exports has declined from an average of 0.21 per cent in 1980s to 0.14 per cent in 1990s.

In calendar year 2002 the share increased marginally to 0.15 per cent. The WTO and the World Bank classify exports into five major categories. The first is resource-based exports.

The second is agricultural exports. The third is low-tech manufactures. The fourth is medium tech manufactures and the fifth is high tech manufactures. Resource-based exports are minerals, oil and gas. They are bounties of nature or gifts of God.

Pakistan has no exportable natural resource. We do export crude oil and petroleum products but this is due to the fact that our heavy crude cannot be processed in our refineries and the output mix of PARCO does not match with the market requirements in Pakistan. Otherwise petroleum, crude and its products are Pakistan's biggest import with a value of more than $3 billion.

Our only other exportable product in this group is marble with a value of less than $20 million. Our neighbour to the west Iran produces three to four million barrels of crude oil per day and our neighbour to the east India has lot of iron ore, coal and aluminium.

Natural resources are very profitable. It costs Saudi Arabia one dollar to drill a barrel of crude oil, which is now selling in the international market at more than 40 dollars per barrel.

Even in southern Pakistan it costs four dollars to drill a barrel of oil. In the north it cost more because of smaller wells with harder oil. Being devoid of any exportable mineral is a handicap for Pakistan's exports.

The second category is agricultural commodities, which require no explanation, Pakistan has been an exporter of agricultural commodities since its inception. However, the agricultural commodities now constitute only 12 per cent of Pakistan's total exports.

The major commodities are rice, fish, leather that are traditional and fruits and vegetables which have shown encouraging increase during the last few years. Raw cotton is a very minor export now and in FY 03 its level was only $49 million.

Pakistan's inability to increase its cotton production, which touched a peak of 13 million bales few years ago and is now only about 10 million bales, has led to reduction of its agricultural exports.

The third category is low-tech manufactures. This includes textiles, carpets, handicrafts, sports goods, surgical instruments, leather manufactures, cutlery etc. Low-tech manufactures constitute 77 per cent of the total exports.

Textiles are of course the biggest contributing 67 per cent of the total exports. Although our exports have surged but the contribution of textiles has remained at two-third of the total exports.

There has, however, been a significant shift in the composition of textile exports from cotton yarn and cloth to higher value added fabrics, knit-wear and ready-made garments.

Whereas cotton yarn and cloth constituted 44 per cent of textile exports a few years ago, in FY 2003 they contributed only 30 per cent. The buoyancy in our exports during last 22 months has resulted primarily from surge in exports of value added textiles.

International trade in textiles and clothing is termed by economists as rag trade because of its low value and low skills. Cotton yarn and cloth are at the lower end of this rag trade and Pakistan has now moved into the upper ladders of this trade with significant increase in exports.

It may, however, be pointed out that Pakistan's share in world exports of textiles and clothing is only two per cent. With the removal of quotas from January 2005, our textiles exports can jump ahead and we can have a larger share of world trade in this category.

The fourth category of medium-tech manufactures consists of engineering goods, automobiles, pharmaceuticals, chemicals, household durables etc. Our exports in this sector are only 3 per cent of our total exports, which shows our insignificant presence in world export of these items.

The high-tech manufactures consist of electronics, computers, IT related goods and software, Pakistan has almost nil exports in this category.

Pakistan's pattern of exports with its concentration on low technology manufactures is different from other low-income countries. A World Bank's study points out that "low income countries showed the most dramatic transformation of export patterns between 1981 and 2001.

In 1981, these countries depended on resource-based products for 87 per cent of their exports, a share that had fallen to 25 per cent by 2001. The share of low technology manufactures rose substantially, from 13 to 38 per cent, while that of medium technology exports went from 3 to 15 per cent.

High technology exports exploded from 2 to 21 per cent." India's export composition is in line with average low-income countries, Low-tech manufactures contribute only 40 per cent (textiles 25 per cent), medium-tech manufactures 20 per cent and high-tech software exports another 15 per cent.

Whereas the world trade in low-tech manufactures is growing at less than 10 per cent, the world trade in medium and high tech manufactures is growing at about 20 per cent.

World trade in medium and high tech manufactures account for about two-third of the total. Therefore, Pakistan has to climb up the ladder from low-tech manufactures to medium and high-tech manufactures if it has to increase its share in world's exports. We cannot increase our share in world's exports by concentrating on textiles only.

The ministry of finance in its Economic Survey and the State Bank of Pakistan in its Annual Report are using decades old classifications of exports. The Economic Survey classifies exports into agricultural commodities; semi-manufactures and manufactures whereas semi-manufactures and manufactures both belong to the category of low-tech manufactures.

Similarly the SBP classifies exports into agricultural commodities, textiles manufactures and other manufactures. Looking at the export classification in the Economic Survey and the Annual Report one would be impressed by the change in composition of Pakistan's exports from agricultural commodities to manufactures.

What they fail to point out is that whereas Pakistan's exports of low tech manufactures are soaring but unlike China, India, Malaysia, Thailand and other developing countries, our exports in world's most buoyant sector of medium and high tech manufactures are not moving at all.

Both the ministry of finance and the State Bank need to reclassify exports into five categories indicated above. Unless it is pointed out that Pakistan is nowhere in the international trade in the medium and high tech manufactures, which is its biggest segment, there will be no inclination to move towards those sectors. After all awareness is the first step to achievement.

The author is former Secretary, Planning, Government of Pakistan.