Special Edition-07.pdf - Lahore School of Economics

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M. Ashraf Janjua
8. In a changing international environment, Pakistan also needs to
diversify exports towards its industrial base. This objective can be
achieved by attracting FDI selectively into such export-oriented
industries that correspond to and utilize the dynamic comparative
advantages of the country. This will proactively create linkages
between domestic firms and Transnational Corporations (TNCs),
enabling local firms to tap the technological expertise of TNCs and
move into integrated international production systems, as indirect or
direct exporters.
9. The structure of the country’s exports suggests the need for a
policy shift, to diversify exports across different products and also
to move towards higher value-added items. The objective of
diversification and value addition can be achieved through
consistent and well-defined strategies. Due to limited resources, a
piece-meal strategy should be adopted to enhance the exports base.
Initially, there is a need to explore the products in which the
country has a comparative advantage and certain low cost measures
will help boost exports, thereby enhancing productivity. In spite of
the fact that fruits, vegetables and fish are produced in abundance
in Pakistan, the processing industry is not developed. One of the
major reasons for Pakistan's poor performance in this field is lack
of a storage and canning facility. Non-traditional agro-based
products like fruits, vegetables, dairy products and fish offer vast
scope to augment domestic production and exports through crop
substitution, the introduction of modern technology for storage,
processing and packing, etc. The Trade Development Authority of
Pakistan (TDAP), formerly the Export Promotion Bureau, should
plan cold storage houses at different points in the fruit growing
areas to handle farm products for export purposes. These storage
houses should also serve as places where training for the packaging
of fruits, vegetables and fish for export should be imparted to the
exporters.
10. The variables such as trade openness, government consumption
and capital inflows lead to depreciation of the REER index, while
workers’ remittances, terms of trade, and total factor productivity
vis-à-vis trading partners lead to an appreciation of the REER
index.