Country needs to modernise manufacturing sector: IPR

Risks being left behind permanently if it does not focus on science and technology

LAHORE: A sustained growth of Pakistan’s economy is possible only with export of high value-added goods, says a policy brief issued by the Institute for Policy Reforms (IPR) on Saturday.

The policy paper, written by Higher Education Commission’s former chairman Dr Attaur Rehman, said in order to achieve steady growth, Pakistan must focus on science and technology. “It is critical for the country’s future as Pakistan risks being left behind permanently.”



Pakistan’s main export product is textile that constitutes 60% of its total export shipments. It has a mere 6% share in world’s exports.

Overall, manufactured goods are 67% of the world trade. Pakistan’s role in world trade is limited because it does not have value-added products to produce in bulk. It is the main reason why its exports do not increase. Also, according to the policy paper, no economy grows on a long-term basis without a dynamic and continually modernising manufacturing sector.



The share of manufacturing in Pakistan’s gross domestic product (GDP) is below 14%, whereas it ranges between 37% and 43% in middle-income East Asian economies. India and Bangladesh have a share of 30% and 28% respectively.

Support through science and technology was the only way for the private sector to productively use the external and internal knowledge needed to manufacture and export value-added goods, it stated.

As its starting point, the brief talked about the weak state of education in Pakistan and emphasised the need for immediate declaration of a national education emergency. “War-footing focus on education is necessary for improving the quality of managerial and line level workforce.”



Another key component of the strategy is to set up specialised training and research institutions in a wide range of areas to build industrial and agricultural competitiveness. As a third component, the strategy advocated incentives for educational development.

To ensure consistency in the quality of goods produced in the country, the strategy called for establishing standard and testing institutions.

Knowledge transfer from overseas is also a key instrument to upgrade industry. Consequently, the strategy called for making all foreign direct investment (FDI) approvals contingent upon the transfer of knowledge.

The strategy can be underpinned by earmarking sufficient public funds for its implementation. Allocation of 3% of GDP has been recommended for the purpose.

The IPR cautioned that as the world was now into the fourth-generation industrial revolution, Pakistan must prepare itself for the new era as many manufacturing sectors were evolving and taking new shapes.

“Driverless cars will populate roads and robots are staffing factory floors. So, for Pakistan the challenge is not merely to catch up in manufacturing, but to be ready for an evolving manufacturing sector based on artificial intelligence and robotics. For this, Pakistan must radically and immediately upgrade its engineering capabilities.”

Published in The Express Tribune, May 27^th, 2018.

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