There seems to be a general ‘consensus’ among policymakers that the underlying cause of Pakistan’s economic woes is the poor performance of the export sector. Pakistan’s economy is currently based on import substitution and to make it an export based economy, the country must restructure its economic policies to benefit the many. Not the few.
Let’s start with the country’s biggest export partner – the United States.
Despite Islamabad’s shaky relationship with the Washington over the past few decades, 2020 estimates show that around 17 per cent of Pakistan’s total exports are absorbed into the US market. Pakistan has consistently run a trade surplus with the US since the mid 1990s.
From an international trade perspective, this is not surprising at all because the US is not only one of the largest consumer markets in the world, it is also a net importer.
Although Pakistan runs a trade surplus with the US, in reality, Pakistan’s export growth to the US is meagre when compared to peer-economies in the region. Bangladesh, for example, earned 54pc more revenue (in terms of US dollars) in 2020 from its exports to the US than Pakistan. There is, therefore, much potential for Pakistan to increase exports to the US.
But how? Economist Danish Khan explains how.
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