Scribd
Upload
32 views5 pages

Trade-Summary: Reasons For The Decline in World's Export Share of Pakistan

Uploaded by

Khushbakht Farrukh

1. Pakistan's export share has declined due to low-tech products comprising 50% of exports, poor transportation infrastructure ranking Pakistan low in road and railway quality, and lower labor productivity compared to other countries. 2. Pakistan's trade liberalization in the 1980s replaced quotas with tariffs and standardized sales tax, but growth in the 1990s was slowed by an overvalued currency. Exports increased after currency devaluation in 1999. 3. Pakistan's top exports are cotton textiles, sports goods, and leather, which rely on domestic materials and are vulnerable to climate, while imports mainly consist of machinery, petroleum, and high-tech goods from developed and oil producing countries.

Copyright:

© All Rights Reserved
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt

Trade-Summary: Reasons For The Decline in World's Export Share of Pakistan

Uploaded by

Khushbakht Farrukh
32 views5 pages
1. Pakistan's export share has declined due to low-tech products comprising 50% of exports, poor transportation infrastructure ranking Pakistan low in road and railway quality, and lower labor productivity compared to other countries. 2. Pakistan's trade liberalization in the 1980s replaced quotas with tariffs and standardized sales tax, but growth in the 1990s was slowed by an overvalued currency. Exports increased after currency devaluation in 1999. 3. Pakistan's top exports are cotton textiles, sports goods, and leather, which rely on domestic materials and are vulnerable to climate, while imports mainly consist of machinery, petroleum, and high-tech goods from developed and oil producing countries.

Original Description:

International Trade

Original Title

Trade

Copyright

© © All Rights Reserved

Available Formats

DOCX, PDF, TXT or read online from Scribd

Did you find this document useful?

Is this content inappropriate?

1. Pakistan's export share has declined due to low-tech products comprising 50% of exports, poor transportation infrastructure ranking Pakistan low in road and railway quality, and lower labor productivity compared to other countries. 2. Pakistan's trade liberalization in the 1980s replaced quotas with tariffs and standardized sales tax, but growth in the 1990s was slowed by an overvalued currency. Exports increased after currency devaluation in 1999. 3. Pakistan's top exports are cotton textiles, sports goods, and leather, which rely on domestic materials and are vulnerable to climate, while imports mainly consist of machinery, petroleum, and high-tech goods from developed and oil producing countries.

Copyright:

© All Rights Reserved
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
32 views5 pages

Trade-Summary: Reasons For The Decline in World's Export Share of Pakistan

Uploaded by

Khushbakht Farrukh
1. Pakistan's export share has declined due to low-tech products comprising 50% of exports, poor transportation infrastructure ranking Pakistan low in road and railway quality, and lower labor productivity compared to other countries. 2. Pakistan's trade liberalization in the 1980s replaced quotas with tariffs and standardized sales tax, but growth in the 1990s was slowed by an overvalued currency. Exports increased after currency devaluation in 1999. 3. Pakistan's top exports are cotton textiles, sports goods, and leather, which rely on domestic materials and are vulnerable to climate, while imports mainly consist of machinery, petroleum, and high-tech goods from developed and oil producing countries.

Copyright:

© All Rights Reserved
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
You are on page 1/ 5

Trade-Summary

Reasons for the decline in worlds export share of


Pakistan
1. Low technological products
-

50% of the exports are low technological products.


Other countries have more than 50% of medium and high technological
products.

2. Poor transportation network


-

Road: Pakistan ranks 72 in terms of road quality.


Railway: Pakistan ranks 60 in terms of railway quality.
Increases transportation cost.

3. Labor Productivity

4. Red Tapism
-

More documentation as compared to other countries.

Trade Trend of Pakistan

1980s
-

Trade liberalization:
1. Replaced non-tariff barriers (quotas, license, sanctions etc.) with tariffs.
2. Tariff slabs were reduced from 17% to 10%.
Sales Tax Rates on various commodities was replaced with one uniform
sales tax rate of 12.5%.
Duty Drawback Scheme (A refund that can be obtained when an
import fee has already been paid for a good, but the manufactured good is
then subsequently exported) was expanded.

1990s
-

Import Liberalization under SAP: The increase in imports lead to trade


deficit.
Exports did not grow well because of the worldwide financial crisis,
which led to inflation (increased from 11.8% to 13% from 1991-1995).
Unable to diversify the export portfolio
1. Highly concentrated items
2. Highly concentrated countries
During the mid-90s, Pakistan signed SAPTA, which promoted trade with
the SAARC countries.
Govt. gave importance to neighboring countries including China,
Japan, Malaysia, Saudi Arabia, Singapore and Indonesia (35%-40% imports
from these countries).
Export growth - 1992-93: 0.3%, 1993-94: -1.4%
In 1992-93, textile sector was effected due to reduced cotton output.
The growth in the 90s did not meet the benchmark consequence, which
was expected by the policies made.
Unrealistic and overvalued exchange rate in 1990s contributed to
slow growth of exports. One can observe a boost in exports after 1999,
when the Rupee was depreciated against the dollar.

2000s
-

Construction boom
High demand for automobile related items.

2002-2003
-

Liberalization
Deregulation
Reduction in the CODB
Promotion of Export of services

2003-2005
-

Imports comprised of earthquake relief related items.


Trade deficit increased b/c of high oil, food and automobile prices.
In 2004, SAFTA was signed, as SAPTA was expired.
Reduction of custom tariffs.
Pakistan did not benefit, as Pakistans exports increased by 5%, while
that of EU rose by 60%. Also, most of the SAARC countries are primary
good producers.

2007-2008
-

Import bill increased because of high oil and food prices.


Textile Mills were closed because of load shedding issues, which increased
the cost of production.
The export target was not met.
The domestic demand was not fulfilled by the local producers; hence
increase in imports.
The trade and current deficit continued to increase because of the
ongoing import liberalization under the instructions of IMF and WTO.

2008-2010
-

High Oil Prices


Global financial crisis
Food shortages

2010-2012
-

Exports rose by 27% in 2010-2011.


They fell by 4.7% in 2011-2012 because of both international (reduced
cotton prices, global crisis, and global demand shrinkage) and domestic
(high financing cost, power shortages etc.) Reasons.
Conversely, in the first 10 months of 2011-2012, the exports rose by 28%,
resulting in a trade surplus.
In June 2011, an agreement was signed with Afghanistan named APTTA
(Afghan Pakistan Transit and trade Agreement), which encouraged formal
trade b/w the two countries.
Increasing import of petroleum and its related products and further
devaluation of currency, caused the import bill to rise.

2014-2015
-

Decrease in exports caused by decrease in the prices of commodities.


Ongoing energy crisis affected exports.
Economic slowdown in the major export markets (USA, China, etc.)

Export Structure

Less % of cotton in the export structure of 1960s, because of the high


domestic demand.
Raw wool hides, skins and tea disappeared from the export list in 1970s
because of high - domestic demand.

1980s and 1990s were the golden years for cotton manufacturers as the
productivity of cotton production increased due to use of better seed,
increased use of pesticides and fertilizers followed by the liberalization of
the pesticide industry and partial liberalization of fertilizer industry.
In 2000s, share of synthetic textiles fell sharply because of severe energy
crisis.

Three quarters of manufactured exports concentrated in four industries:


cotton textiles, sports, leather and footwear.
The remaining comprises of other industry categories.
Manufactured Exports

Cotton and
Leather
-60% of the total
ME
-Rely on
domestic raw
materials
-Highly
vulnerable to
climatic shocks

Footwear & Sport


-Common raw
material is
rubber.
-Rubber is
imported for both
of these
industries.

The share of Netherlands, France, Italy, South Korea and India have
declined sharply over the years.
Although Italy used to be a major export market for Pakistan before.

Import Structure
-

Mainly comprises of machinery, petroleum products and high value added


products.
The countries where the imports are concentrated are developed
countries because of technical assistance, foreign aid and availability of
required machinery and oil producing countries.

Table 11 shows that average share of all these markets namely France, China, Italy,
Singapore, India and South Korea has increased in last two decades from 18.1 in
1991-95 to 22.3% in 2006-10. China emerged as significant market for the imports
of Pakistan with its average share increasing from 4.6% in 1991-95 to 11.4% in
2006-10. This could be the one reason of the decline in the imports from Japan.
Imports from France, Italy and South Korea have fallen over the last two decades
while India, China and Singapore have gained the share in Pakistan imports

You might also like