Diversifying exports

When it comes to international trade, most economies have by now learnt to focus on their competitive advantages in order to boost their exports. Pakistan, however, appears to be largely content with developing a few industries and letting the rest of the country’s massive natural endowments go to waste. So it is a welcome sign that the Nawaz Administration is trying to turn that around, by focusing trade promotion activities and policies beyond the traditional export sectors, mainly textiles.

It is astounding that, despite the fact that Pakistan produces four major crops — cotton, wheat, rice, and sugar cane — it is engaged in major exports of only two (cotton and rice) and value-added exports of only one (cotton textiles). Part of this is the legacy of a highly inefficient agricultural system, but a large part of it is the government’s own distortionary policies. For decades, the textile industry was the recipient of far more privileges than any other industry, leading it to grow and gain an outsized lobbying role. Other industries suffered as scarce government resources were diverted to feed the needs of just one industry. It is long past the time for the government to adopt a more fair set of policies that treat all industries fairly and give them a chance to grow. The government should not be in the business of picking winners and losers in any market.

We are encouraged also to note that agribusiness is finally getting the government’s attention. Nearly half of Pakistan’s workforce is directly engaged in agriculture. The fastest way to make a dent on poverty and create a large and thriving middle class in Pakistan is to improve productivity in the agriculture sector. That rise in productivity, in turn, can only happen when the sector focuses on gearing up to compete in the global marketplace. The Trade Development Authority of Pakistan is making some useful noises. We hope their pronouncements are followed up by action.

Published in The Express Tribune, September 29^th, 2013.

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