Sunday, September 27, 2020

UNIDO 2020: Pakistan Industrial Output Lags Behind Peers in South Asia

Manufacturing in Pakistan lags behind Bangladesh, India and Sri Lanka in terms of manufacturing value added per capita as well as per capita exports of manufactured products, according to Competitive Industrial Performance Report 2020 released by United Nations Industrial Development Organization (UNIDO). 

Pakistan's Competitive Industrial Performance. Source: UNIDO

On the competitive Industrial Performance (CIP) Index, Pakistan ranks 82 among 152 countries, well behind India at 42, Bangladesh at 70 and Sri Lanka at 75. Only Maldives (144) and Nepal (135) rank lower than Pakistan. Bangladesh has built a very successful garments manufacturing and export business that rivals China's. The country is now focusing on building mobile phones and consumer electronics industry.  

India's Competitive Industrial Performance. Source: UNIDO

Only 1.3% of Pakistan's manufacturing is high-tech and 9% medium tech, better than Bangladesh's 0.4% high-tech and 1.5% medium tech, but considerably worse than India's 9.4% high tech and 25.4% medium tech. 

Bangladesh's Competitive Industrial Performance. Source: UNIDO

Nearly 40% of India's manufacturing output is based on locally extracted natural resources like iron ore and coal, much higher than Pakistan's 9.7% and Bangladesh's 1.9%. Pakistan's per capita manufactured exports add up to only $87 per capita, well behind Bangladesh $198 and India $208. Per capita manufactured output in Pakistan is $178 versus Bangladesh's $281 and India's $299. 

China's Competitive Industrial Performance. Source: UNIDO

The most successful example of a manufactured exports-driven economy in Asia is China, ranked number 2 in the world, just behind top-ranked Germany. China's per capita manufacturing value added is $2,726 and its per capita manufactured exports add up to $1,685. High-tech manufactured products account for 30.6% of Chinese manufacturing output while its resource-based manufacturing is just 9.3% of its output.

Pakistan's Manufacturing Output Trend Since 2000. Source: World Bank

Manufacturing industries are defined by the International Standard Industrial Classification (ISIC).  Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. 

Here's Pakistan's manufacturing output in current U.S. dollars:

Pakistan manufacturing output for 2019 was $34.66B, a 9.57% decline from 2018. In 2018, it was $38.33B, a 4.88% increase from 2017. Pakistan manufacturing output for 2017 was $36.54B, a 8.56% increase from 2016. It was $33.66B in 2016, a 2.73% decline from 2015.

Pakistan Manufacturing Output Peer Ranking 2019. Source: World Bank

Pakistan’s overall exports have continued to lag behind those of its South Asian counterparts since the early 1990s. Bangladesh’s exports have increased by 6.2 times compared to Pakistan’s, measured in terms of exports per capita, and that of India by 6.8 times, according to Princeton's Pakistani-American economist Atif Mian. 

Pakistan's average economic growth of 5% a year has been faster than the global average since the 1960s, it has been slower than that that of its peers in East Asia. It has essentially been constrained by Pakistan recurring balance of payment (BOP) crises as explained by Thrilwal's Law. Pakistan has been forced to seek IMF bailouts 13 times in the last 70 years to deal with its BOP crises. This has happened in spite of the fact that remittances from overseas Pakistanis have grown 24X since year 2000. The best way for Pakistan to accelerate its growth beyond 5% is to boost its exports by investing in export-oriented manufacturing industries, and by incentivizing higher savings and investments.


Anonymous said...

Now you are worrying me.
Facing facts!!! Tabiyat theek?

I hope this is a one off and you'll be back to your favorite retirement pass time of posting negative news on India and positive news on Pakistan.

Get well soon.

Asghar A. said...

Why is Pakistan worse than Bangladesh? Pre-1971. Bangladesh's GDP per capita was much lower than West. Only major export from there was jute. I was in Dhaka in 1963. it was no match for Karachi as far as business environment and development.

Riaz Haq said...

Asghar: "Why is Pakistan worse than Bangladesh?"

Over the last decade, Bangladesh has built a very successful garment manufacturing and export industry that rivals China. Now they’re focusing on mobile phones and electronics products. Shaikh Hasina’s governance in Bangladesh definitely beats Zardari’s and Sharifs’ in Pakistan

Mayraj F. said...

Pakistan’s GDP growth has slowed to a barely 3 percent rate that is economically and
politically unacceptable. The country’s technological backwardness, its low-level of
industrialization, the scale of its domestic market and the youth bulge all suggest that it
is punching much below its weight. There is economic potential that is not being
exploited if a virtuous growth spiral could be catalyzed through policy action that
attracts much needed foreign direct investment into industry and infrastructure that
promotes the diversification and technological upgrading of exports and helps integrate
Pakistani firms more closely with global supply chains. Although the flow of FDI from
China has been modest to date, once China begins offshoring more of its labor-intensive
manufacturing activities, Pakistan’s textile, leather, white goods and auto industries
could stand to benefit. During the medium term, China’s FDI can indirectly assist
Pakistan’s industrialization by helping to ease transport and energy constraints.
However, by the second half of the decade, increased Chinese FDI in light manufacturing
could be induced if much needed policies are implemented.
Can Chinese FDI Accelerate Pakistan’s Growth?

Riaz Haq said...

#Motorcycle production boom in #Pakistan as #COVID19 #lockdown ends. 2.8 million motor vehicles were produced locally during fiscal year 2016-17, which increased to 3.22 million in 2017-18 with a little bit of decline recorded in 2018-19 to 2.86 million.

Industry players expect production to increase around 800,000 units

The first quarter of the fiscal year 2021 is witnessing higher production of motorcycles as the economy recovers from the lockdown that had been imposed to contain the spread of Covid-19 pandemic.

“There is a boom in motorcycle industry of Pakistan,” said Association of Pakistan Motorcycle Assemblers (APMA) Chairman Muhammad Sabir Shaikh.

He added production of motorcycles will hopefully increase around 800,000 units after the current month ends.

Looking at the growing demand for the two-wheeler vehicle, Emerging Innovation - a bike manufacturing company - has set up a new production line for bikes called Revolt.

“We have set up the production plant with 99% deletion program; ie the company will use locally produced auto parts in the making of two-wheelers,” said the company’s country head Anwar Anees, adding, “The locally produced motorcycle will be 33% less costly with an increased fuel efficiency of 62-kilometre mileage.”

“Locally held research and development (R&D) for over two million markets with the aid of engineers from different local universities helped us achieve this efficiency,” said Anees.

Besides two-wheelers, demand for three-wheeler rickshaws and loaders has also increased due to which the company has applied for permission from the government to produce three-wheelers and hybrid electric bikes.

“It is commendable that new production lines are being set up,” said Provincial Minister for Industries and Trade Jam Ikramullah Dharijo. “New factories mean more jobs, which Pakistan is in dire need of at the moment.”

Bikes production in this venture may be the highest ever in the history of Pakistan, said Shaikh. “Sales of motorcycles are also breaking records.”

“However, motorcycles data reported by the media is not complete,” he highlighted.

He said that the data is mostly taken from Pakistan Automotive Manufacturers Association (PAMA), which has only five motorcycle producing members while around 40 companies are producing bikes in the country. Those companies are registered with the Engineering Development Board (EDB).

According to a report by EDB Electric Vehicle Policy 2020-25, two-wheelers and three-wheelers vehicles constitute a significant portion of Pakistan’s overall auto manufacturing.

A total of 2.8 million motor vehicles were produced locally during the fiscal year 2016-17, which increased to 3.22 million in 2017-18 with a little bit of decline recorded in 2018-19 to 2.86 million.

Out of 2.86 million vehicles manufactured in Pakistan, more than 2.4 million motorcycles were manufactured during the same period, said the report.

Rks said...

Asghar: "Why is Pakistan worse than Bangladesh?"

Bangladesh does not have the "Hate India " narrative. Many Indian CEOs work in Bangladesh. Since Bangladesh's GDP is galloping ahead (very close to India also), they are able to hire technical talent from India cheaply. This is helping their high-tech industry. Bangladesh has no historical problems with India, like Kashmir etc. India is its only neighbor. They hardly spend anything on defense. They no longer allow anti-India generals to come to power (like Zia-Ur-Rehman, Ershad etc). I am sure, they will overtake India's GDP in no time.

Anonymous said...

Yes Sheikh Hasina is a development dictator much in the form of Mahatir Mohammad.

Very good for Bangladesh.

Also for Hindu nationalists as Bangladesh will overtake Eastern India in GDP per capita very soon. So higher per capita income + pressure on illegals and Muslims in bordering areas should start a reverse flow of immigrants this decade.

A win win.

Anonymous said...

Rks, hate to bust you bubble, but universe does not revolve around India, nor does the world, South Asia or even Pakistan. As far as hating India is concerned, no one in South Asia is in love with it (other than Indians). Only time will tell if BD's not having a strong military is a good policy or bad.

BD is benefitting from the policies that were laid down decades ago, some even as early as 1930s.

Pakistan's failure is due to it's bad economic policies and bad leadership, nothing more nothing less. India is not even a factor in this.

Ahmed said...

Sir Asghar

This is most probably because former governments of Pakistan eg before the war of 1971, Bangladesh was East Pakistan and it was part of Main Pakistan ,mostly the federal government at that time focused more on the prosperity and development of West Pakistan as compared to East Pakistan (Present day Bangladesh ). But after the war of 1971,when East Pakistan became Bangladesh ,it got its own government which managed the country efficiently and honestly . After 1970s,all these politicians of Pakistan who came into power were mostly power and wealth hungry and cared about their own personal interest rather than national interest .

Ahmed said...


Than on what basis do you Indians insult and underestimate Pakistan and it's performance if you know that their are Indian investors and businessmen who have invested their money in Bangladesh which has helped Bangladesh improve its economy at such level ? What is the contribution of local Bangladeshis in the economic uplift and what is their contribution in the
increase of their economic output ?

How many goods are produced in Bangladesh ?

Ahmed said...


Even Nepal ,Sri Lanka and Burma has problems with India ,now does it mean that these countries have India ? Now does it mean that they are enemies of India ?

When General Musharraf was President of Pakistan, Pakistan was making lot of progress . Was their any good relations between India and Pakistan at that time ?

Anonymous said...

This does not happen in Bangladesh.

1. Bangladeshis don't consider themselves descended from Arabs,Turks etc.

2. They have retained the Bengali script and culture.

3.Hindus have not declined post 1971.They are present in all walks of life business,sports military,bureaucracy, government. There is some discrimination but it is Malaysia tier there is no official blasphemy law,Hindu religious festivals happen in Dhaka every year which are attended by Sheikh Hasina herself.

4. Hasina is completely economic development focused dictator much like Mahatir in the 1980s.Focus is just on the economy no pan Islam or mullahs making fiery speeches in Dhaka.

I won't be surprised if Bangladesh overtakes India proper in per capita income.That is Hasina's stated goal earlier this year she said we will overtake Eastern India in per capita income by end of the year by end of the decade we must overtake India proper.That is our only goal to be the richest among the three largest countries of S Asia.

My consultant friend actually met her in Dhaka came back very impressed.

samir sardana said...

For those worried about the manufacturing demise,in Pakistan.These troubled souls,can note the REAL cost of Manufacturing - excluding Polultion etc.

It is the DESTRUCTON OF THE BANKING SYSTEM.The NPAs in the Banking system (excluding the destruction,of the unorganised finance sector)

Pakistan Had Rs 82000 Crores NPA,in March,2020 (
Pakistan Had USD 530 Crores NPA,in March,2020
Bangladesh Had Taka 111.000 Crores NPA,in March,2019 (Page 6 of file:///C:/Users/admin/ Desktop/Non-PerformingLoansinBankingSectorofBangladesh-AnEvaluation.pdf)
Bangladesh Had USD 1200 Crores NPA,in March,2019
India had Rs 20,00,000 Crores NPA pre Covid (Including MUDRA etc),as of September 2019
India had USD 15,000 Crores NPA,pre Covid,as of September 2019


There is no loss to the Tycoons and the Politicans, as they have pocketed, between 10-30% of the NPAs.

The criminal loss, is for the poor people, farmers and SMEs - as they are off the credit grid - and so ,they have to rely on unorganised financing and usury.

Pakistan has been saved,by the lack of manufacturing.It has no economies of scale or backward integration, or market,to justify a viable capacity,except for a few sectors. Imagine the NPA,PKR,GDP in Pakistan - if Pakistan had to ride,the Sub Prime Crisis and COVID - which has doomed India's economy and banking sector.

Some angel has saved Pakistan.

COVID will change Manufacturing,Work Practices and Labour Practices forever. Hence, manufacturing will be destroyed in several parts of Asia,EXCEPT PRC.


Regarding Mr Anonymous on per capita income of Bangla overtaking India.What is Per Capita ? The Per Capita of Angola,Kenya and Ghana is more than that of India,and that of South Africa and Libya,is 4 to 3 times,that of India

Pick the nation of choice !