Is Pakistan manufacturing sector competitive? Discus some critical facts about competitiveness of Pakistan’s industry.
Is Pakistan manufacturing sector competitive? Discus some critical facts about competitiveness of Pakistan’s industry.
A country can enlarge its external cost competitiveness in any sector, including manufacturing sector, by reducing its unit cost of production relative to those of other countries. This can be achieved either by having lower input prices or higher productivity (i.e. getting more output for any given quantity of inputs) or a more depreciated domestic currency.
The manufacturing sector of any country bears significant importance. With Pakistan’s exports concentrated largely in textile and semi-manufactures, the country needs to strengthen this sector. Since the foreign-currency subjugated export prices for developing countries are largely determined in the international market, any downward slide in them exerts a downward slide in foreign-exchange export earnings. It is therefore crucial, for a country like Pakistan, to prevent the decline in manufacturing output, not only to sustain but also to increase the export share and hence to gain external competitiveness in this sector.
It is now a cliché that the acceleration in the global movement of capital and goods, termed conventionally ‘globalization’, carries both immense opportunities, but also serious potential threats. Ultimately it will be the international competitiveness of firms in particular economies that will determine how far opportunities are converted into lasting national benefits and how far potential threats from heightened international competition result in serious cost. There is general agreement that currently with important domestic policy changes and with the forthcoming end of the international textile and clothing quota regime the economy of Pakistan is at an important crossroads. The competitiveness of the industrial sector in the new more liberal international and domestic environment will have a critical bearing on economic prospects for the foreseeable future.
A country can enlarge its external cost competitiveness in any sector, including manufacturing sector, by reducing its unit cost of production relative to those of other countries. This can be achieved either by having lower input prices or higher productivity (i.e. getting more output for any given quantity of inputs) or a more depreciated domestic currency.
The manufacturing sector of any country bears significant importance. With Pakistan’s exports concentrated largely in textile and semi-manufactures, the country needs to strengthen this sector. Since the foreign-currency subjugated export prices for developing countries are largely determined in the international market, any downward slide in them exerts a downward slide in foreign-exchange export earnings. It is therefore crucial, for a country like Pakistan, to prevent the decline in manufacturing output, not only to sustain but also to increase the export share and hence to gain external competitiveness in this sector.
It is now a cliché that the acceleration in the global movement of capital and goods, termed conventionally ‘globalization’, carries both immense opportunities, but also serious potential threats. Ultimately it will be the international competitiveness of firms in particular economies that will determine how far opportunities are converted into lasting national benefits and how far potential threats from heightened international competition result in serious cost. There is general agreement that currently with important domestic policy changes and with the forthcoming end of the international textile and clothing quota regime the economy of Pakistan is at an important crossroads. The competitiveness of the industrial sector in the new more liberal international and domestic environment will have a critical bearing on economic prospects for the foreseeable future.