Sound industrial policy as a central part of Pakistan's Development Strategy is imperative to increase the share of manufacturing sector's output in GDP from about 16 percent to about 25 percent and share of manufacturing employment from 13 percent to about 18 percent in next decade, said Asian Development Bank (ADB) experts.
"If Pakistan is to maintain and even increase its growth rate, then it has to accelerate its structural transformation and improvements in the quality and diversification of its exports", they urged.
They suggested to increase labour productivity in manufacturing by an average of 3 percent per annum and to increase share of medium and high-technology manufacturing (non-electrical machinery, electrical machinery and transport equipment) in total manufacturing output from about 12 percent to about 20 percent during the next decade.
ADB URGED PAKISTAN TO EXAMINE THE FOUR QUESTIONS:
(i) What information is needed to assess completely where Pakistan's structural transformation stands, and what are the possibilities for upgrading the country's production structure?
(ii) What institutional framework and policies should Pakistan's policy makers design and implement to ensure the successful transformation of its economy and rapid growth, and how should this process be conceptualised and undertaken?
(iii) How are the sectoral imbalances and reallocation of labour that structural transformation entails to be managed?
(iv) How can Pakistan design a plan for structural transformation?
According to update studies of Central and West Asia Department (CWRD) of ADB, developing new activities and products is not easy for most developing countries. Lack of markets and coordination problems can create insurmountable difficulties. For this reason, new activities are rarely created in a vacuum, as their development has to take place in the context of the existing capabilities, which are useful to the extent that they are similar to those of the new products and activities. However, the degree of similarity of capabilities might vary between any pair of activities.
Upgrading Pakistan's production and export structures does not happen without a well thought out and crafted push. Structural transformation in the successful Asian economies did not come naturally or easily.
Pakistan has achieved a technological level that allows it to manufacture nuclear weapons, while Singapore lacks that particular technology. This, however, is no guarantee that Pakistan can undergo successful structural transformation.
The capabilities and institutions needed to develop a broad-based and sophisticated manufacturing sector that employs millions of workers are different from those required to be able to make nuclear weapons.
While both undertakings call for political will, the latter requires the mobilisation and coordination of a much wider group of participants in society, within the context of a market economy where globalisation, fast technical change, competition, and the demand question of what consumers want, are the rules the game. Singaporean companies understand this.