Pakistan's Export-Led Growth Strategy
AN EXPORT-LED GROWTH STRATEGY
Meekal Ahmed *
This essay makes no pretence to offer a novel concept or a new development strategy and most economists reading it will probably stifle a yawn and turn the page. Yet it is a subject worth talking about. Many countries round the world, most notably the former Asian Tigers, China, Brazil, Turkey and more recently India have followed such a strategy with great success. Pakistan has not and it is well to ask why and what we can do about it. Pakistan has never had a consistent, coherent and well-articulated export-led growth strategy. Indeed, exports are often treated as a residual, an after-thought, once the domestic market has been filled. This is inexplicable given our persistently large trade deficit which has not been reduced over time and we have difficulty financing it (filling the gap) each year. Economic growth has at various times been driven by either the public or private sector or more recently - and most disastrously in the previous government - by consumption which created dangerous asset- price bubbles in the domestic economy, led to overheating pressures and a surge in inflation and imports. Economic growth has never been driven by exports nor has building a dynamic export sector been at the forefront of any government's economic strategy. While the large-scale manufacturing sector in Pakistan is the focus of policy attention not least because it has a powerful lobby, it is the tip of the manufacturing (and export) sector ice-berg. It is the small and medium-enterprise manufacturing (SME) sector in Pakistan that generates four-fifths of our manufacturing output, employment and exports. Sustained and focused policy-driven growth in this sector with its strong forward and backward inter-industry linkages is the kind of -inclusive- growth that Pakistan urgently needs. With labor-input a large component of capital and output, rapid SME growth has important positive implications for wages, employment, living
Meekal Ahmed *
This essay makes no pretence to offer a novel concept or a new development strategy and most economists reading it will probably stifle a yawn and turn the page. Yet it is a subject worth talking about. Many countries round the world, most notably the former Asian Tigers, China, Brazil, Turkey and more recently India have followed such a strategy with great success. Pakistan has not and it is well to ask why and what we can do about it. Pakistan has never had a consistent, coherent and well-articulated export-led growth strategy. Indeed, exports are often treated as a residual, an after-thought, once the domestic market has been filled. This is inexplicable given our persistently large trade deficit which has not been reduced over time and we have difficulty financing it (filling the gap) each year. Economic growth has at various times been driven by either the public or private sector or more recently - and most disastrously in the previous government - by consumption which created dangerous asset- price bubbles in the domestic economy, led to overheating pressures and a surge in inflation and imports. Economic growth has never been driven by exports nor has building a dynamic export sector been at the forefront of any government's economic strategy. While the large-scale manufacturing sector in Pakistan is the focus of policy attention not least because it has a powerful lobby, it is the tip of the manufacturing (and export) sector ice-berg. It is the small and medium-enterprise manufacturing (SME) sector in Pakistan that generates four-fifths of our manufacturing output, employment and exports. Sustained and focused policy-driven growth in this sector with its strong forward and backward inter-industry linkages is the kind of -inclusive- growth that Pakistan urgently needs. With labor-input a large component of capital and output, rapid SME growth has important positive implications for wages, employment, living