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|
|India's Competitive Industrial Performance. Source: UNIDO|
|Bangladesh's Competitive Industrial Performance. Source: UNIDO|
|China's Competitive Industrial Performance. Source: UNIDO|
|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.
|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.
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