Innovation, technology can lead Pakistan to become export powerhouse: WB report

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ISLAMABAD, Dec 13 (APP): South Asia could become the fastest
growing exporting region of the world if authorities in Pakistan and
its South Asian neighbors implement a set of policy actions aimed at
improving the business environment, connecting to global value
chains (GVC), leveraging clusters, and strengthening firm
capabilities.
A a new World Bank report – South Asia’s Turn: Policies to
Boost Competitiveness and Create the Next Export Powerhouse- argues that increasing productivity of firms in Pakistan and the rest of
South Asia is the only sustainable path to improving
competitiveness.
Today, a broad set of constraints limit the growth and export
potential of Pakistani firms vis-…-vis their competitors in East
Asia and the rest of the world.
In order to address these, the report highlights the well-
known challenges in the region’s investment climate, but more
importantly draws attention to less-well-researched areas such as
the role of cities and clusters, global value chains, and firms’
abilities to innovate and efficiently use resources, including
technology.
The region’s great potential to boost its competitiveness is
evidenced through a number of examples in the report, ranging from
the highly successful apparel industries in Bangladesh and Sri Lanka
to Pakistan’s light manufacturing cluster in Sialkot which has
achieved dominant global market shares in products such as soccer
balls and surgical instruments.
“Pakistan, in particular, has important strategic endowments
and development potential”, says Illango Patchamuthu, World Bank’s
Country Director for Pakistan.
“Located at the crossroads of South Asia, Central Asia, China
and the Middle East, Pakistan is at the heart of a regional market
with a vast population, large and diverse resources, and untapped
potential for trade.”
Pakistan leads many global competitors when it comes to wage
competitiveness and proximity to key markets yet continues to
experience weakening in exports competitiveness.
Exports remain concentrated in the textiles and food sectors
and investment in global value chain capabilities including physical
capital, human capital, institutions and logistics remain limited.
“The region has a significant untapped potential in raising
productivity through development of urban ecosystems providing thick
markets for skilled labor, large tracts of industrial land, and
world class logistics,” says Vincent Palmade, Lead Economist and one
of the report’s co-authors.
According to the report, firms realize significant
productivity benefits from locating in areas with a wide diversity
of workers, suppliers, and customers.
With the right set of productivity-enhancing policies, South
Asia could more than triple its share in global markets of
electronics and motor vehicles and come close to doubling its
already significant market share in apparel (excluding textiles and
leather) by 2030.
To achieve that progress, South Asian countries, Pakistan in
particular, will do well to improve their business environment.
As acknowledged in the recent World Bank 2017 Doing Business
report, the implementation of needed reforms is gaining momentum,
and needs to be accelerated.
Pakistan should also leverage the benefits of its cities
clusters by actively mitigating congestion forces and facilitating
access to industrial land.
Expanded participation in global value chains to markets
through improvements in trade policies, logistics, and skills will
also be beneficial.
The report also calls for helping firms innovate, improve
their managerial capabilities, and use technology to better connect
with customers and suppliers for boosting competitiveness.