An Asian Development Bank's (ADB) study doubts if Pakistan's focus on exports' growth via low-valued textiles will bring the expected dividends.
The study entitled 'Industrial Competitiveness: The Challenge for Pakistan' states there are several problems with relying too much on production of the textiles and clothing as the long-term growth prospects in the sector are not particularly good.
The study prepared by renowned scholars and experts will be released next week in the hope that it would contribute to the debate on a key issue.
A news release on Friday said that the ADB's Pakistan's Resident Mission (PRM), in association with the ADB Institute had initiated a series of policy seminars for the government officials and other stakeholders in Pakistan.
These seminars centre on policy issues of interest to the government and civil society, and aim to disseminate 'best practice' thinking in selected policy areas.
However, the study also finds that much remains to be done to put Pakistan on a path towards sustainable economic growth.
The main concern in the industrial sector is the continuous over-reliance on production and export of low value-added products, mainly in the textile and clothing sectors.
The long-term growth prospects in the sector are not particularly good. World exports in the sector are growing more slowly than higher value-added goods such as electronics, chemicals and pharmaceuticals.
In addition, the textiles and clothing production is relatively simple which allows for easy entry by new producers which, in turn, heightens competition and pushes down prices.
Lastly, production of textiles and clothing does not have the spill-over effects in terms of enhancing the economy's technical capacities or improving skills of the economy's labour force, that are the result of production of more technology-intensive goods.
The first of the series of seminars on Pakistan's industrial competitiveness was held in Islamabad, Lahore and Karachi, respectively, in November 2003. The ADB PRM invited internationally renowned scholars, Sanjaya Lall from Oxford University, Johan Weiss, ADB Institute, and Peter Brimble, Asia Policy Research, to speak on the subject.
As part of the preparations for seminars, Sanjaya Lall and Johan Weiss prepared a detailed background study entitled 'Industrial Competitiveness: The Challenge for Pakistan', which is now being published in the form of an ADB Institute-PRM seminar paper. It examines trade data over a 20-year period.
The paper shows that the government, over the last 10-15 years, has carried out important reforms, which have contributed to improving the trade performance of Pakistan's economy.
Furthermore, the investment climate has been improved as a result of policy initiatives such as streamlining of procedures required to start a business and measures taken to minimise the time that businesses spend dealing with the government inspections.
The paper argues that to move into the production of technology-intensive products, Pakistan must make a concerted effort to upgrade its human resources and technological capacities.
The study concludes by laying out requirements for preparing and implementing an effective industrial strategy as:
(i) an assessment of the industrial sector and its sub-sectors;
(ii) development by a high-level agency of a national strategic vision;
(iii) design of policies and programmes;
(iv) implementation of the programme; and
(v) monitoring the progress of the strategy, assessing its successes and shortcomings and adjustments as necessary.