Introduction If we consider the face value only, Pakistan has come a long way from $2.2 billion worth of trade in 1970 to $57 billion in 2010-a 25 times increase. But if we compare it with its competitors and peers in the region like India and Bangladesh we find Pakistan to be seriously outperformed. Trade in these countries increased 175 and 45 times respectively during this time period. Most economies which have experienced export-led growth like Singapore and Taiwan have trade figures exceeding 100%. Pakistan’s trade performance remains dismal and unrelated to its economic growth due to several reasons such as large proportion of imports, limited diversification and low competitiveness and value addition. The country has also attempted to liberalize its trade regime over the years reducing the tariff barriers and replacing the NTB’s with tariff protection, in order to contain the anti-export bias. The following paper discusses the countries trade performance in the last four decades (1971-2010) focusing on the export and import growth trends and the trade policies implemented this period. Next, there is a discussion on the change in structure of the exports and imports over this time and global competitiveness of Pakistan’s exports. After the War-1970’s In 1971, the most populous province of Pakistan seceded from the country to become an independent country and this separation had a significant impact on the country’s economy. This is because prior to 1971 war the bulk of trade of Pakistan was carried out between East and West Pakistan. West Pakistan’s exports to East Pakistan consisted of 52% of manufactured and 48% of primary commodities whereas East Pakistan’s exports to West Pakistan consisted of 80% of manufactured good... ... middle of paper ... ... as ways to improve competitiveness. Improving trade links with India and entering into more comprehensive regional preferential trade agreements is one approach being taken by the present government to improve the trade performance. According to Dr. Ishrat Husain’s article in Dawn, studies have established that “present volume of $2.6 billion trade between Indian and Pakistan can be multiplied to $10bn by normalizing trade relations…….Most of the trade taking place through Dubai will also be diverted through official channels earning tax revenue”. The countries across South Asia-India, Bangladesh and Sri Lanka are moving towards greater economic cooperation as they make bilateral trade agreements and further open their economies. This might be a good chance for Pakistan to improve its global competitiveness by increasing its share of exports in the world market.
Free trade comes with its share of pros and cons. It is responsible for increased economic growth, better business environments, encourages investment
These countries should consider embracing free trade in order to fully benefit in many areas for their economy. There are several pros and cons to consider regarding free trade. Free trade fully removes any hassles of taxes and other government restrictions that limit international trading opportunities. Free trade vastly improves upon the economic wellbeing of all nations involved in international trading. Since free trade also allows each nation involved to specialize and create specific commodities, free trade can run efficiently and inexpensively compared to other complicated
Global trade patterns have changed greatly from 1750 to the present. Certain regions have gained and lost their importance to the world wide economy. This shift in trade from the Indian Ocean to the Atlantic, and finally to the Pacific highlights how different factors influence the demand for different goods.
The political force moved away from the painstakingly and time-consuming technique of multilateral tariff negotiations to smaller regional and bilateral provisions - the Regional Trade Agreement. In these arrangements; members accord preferential treatment , basically agreeing to liberalize the exchange of goods and services amongst each another giving regard to certain trade barriers. RTA is not the first-hand way of trade liberalization though. Initially, when multilateral trade discussions used to happen, two-sided and multiparty FTA”s filled the vacuum. There were restrictions from stringent and premeditated trade arrangements earlier, thus a lot of states are now moving towards freer trade for their own benefits.
While free trade is supposed to mean that governments do not interfere with trade by applying policies to affect trade, all governments do intervene in trade to give their country an increased financial advantage. The effects of the government policies are further discussed as well as how those policies affect free trade.
As soon as the shift to a free trade regime appeared along with the competition with countries such as China and Indonesia the quick collapse of Bangladesh’s textile industry has been predicted. However, the opposite occurred. We can highlight three major reasons to explain what happened:
In view of certain political and legal advantage, Voluntary export restraint (VER) has become the priority and preferred instruments of trade policy. This is because people believes that the beneficial of voluntary export restraint is relative to the import restriction. However, the detrimental effect by exporting country has destructed to the importing country that will be prompted the revenue and profit from the restriction rents become benefits appropriate to the former that would accure to the latter. (Salvatore, n.d.; Wang, 2012)
Firstly, what should be noted here is that international trade has been providing different benefits for firms as they may expand in different new markets and raise productivity by adopting different approaches. Given that nowadays marketplace is more dynamic and characterized by an interdependent economy, the volume of international trade has grown substantially in recent years, reducing the barriers to international trade. However, after experiencing the economic crisis that took its toll in 2008 many countries adopted a different approach in terms of trade barriers by introducing higher tariffs in order to protect domestic firms from foreign competition (Hill). Secondly, in order to better understand the implications of the political arguments for trade it is essential to highlight the main instruments of trade policy (See appendix 1).
Trade is more than the exchange of goods and services; it sows the seeds for growth, development and provides the knowledge and experience that makes development possible (Cho, 1995). Trade is considered one of the main driving forces behind economic growth and poverty reduction, especially in Africa (Fosu and Mold, 2008). Adam Smith’s 1776 theory of absolute advantage states that a trading nation can gain by specialising in the production of the commodity of its absolute advantage and exchanging part of this output with other trading partners for the commodities of its absolute disadvantage (Llorah, 2008). This process enables countries to extend beyond their borders, allowing greater specialisation in production, enhanced effectiveness in use of thin resources, the growth of national income, the capacity to accumulate independent wealth and enhances the growth of the economy (Cho, 1995). According to DFID’s report, Trade Matters, other positive derivatives include raised employment, increased household income and the chance for people to earn their way out of poverty, independent of aid (DFID, 2005). The role of trade, while strongly advocated, is still highly debated (Collins and Graham, 2004; Madeley, 2000) and many recent studies question the positive role of economic growth on open trade (Bene, 2009). The extensive arguments surrounding this controversial discussion empirically highlight the difficulty in isolating the effect of trade liberalisation on economic growth, although it is clear that it does, and will continue to have, an important role in poverty alleviation.
Export- oriented growth model will improve India’s Balance of Payment and help in accumulating foreign exchange reserves (which is very important given the
Pakistan is the basis in the international fight against terrorism to this day. Many Pakistani terrorist groups have made many terrorist attacks around the world. Pakistan faced the choice siding with or staying against the United States during the aftermath of 9/11. Violence in Pakistan has increased for many years as terrorist groups have targeted many political leaders, tribal leaders, the military, and also schools. Pakistan is divided into people who see the country as modern and/o...
Agricultural sector is the major contributor in the GDP of Pakistan. It contributes around 20.9% to the country’s GDP and provides employment to around 67% of the people to the rural population. Our agriculture sector supplies raw material to the industrial sector especially the textiles industries, the largest industrial sub-sector of the economy. In this perspective, any shift in the agricultural income can affect the economy as well as the rural population of the country.
Pakistan can be categorized as the “Agricultural Society”. Industrial sector is also working in Pakistan but it’s not fully developed as that of other countries including the America etc.
The shift to a free trade regime in the textile industry was good for Bangladesh. Bangladesh prospered when other economies were not t doing so well. The textile industry greatly increased causing it to become a major reason as to why the economic has continued to increase. Increasingly bring in billions and billions from exports between 2006 to 2012 like the book mentions.
Pakistan has all the major ingredients necessary to become a developed nation; it has a geo-strategic location, a generous availability of natural resources and a large population in the working age. Despite having the potential to turn itself into a developed country, Pakistan has not been able to fulfill its potential.