Ever since the price of commodities have started to come down and Pakistani exports have started heading south, the hue and cry over overvalued exchange rate has gathered pace in policy circles as well as in print and electronic media.
From bilateral and multilateral donors to local independent economists and business groups, all have lamented over exchange rate problem. And rightly so! Exchange rate is indeed a problem, for it prevents the country’s exports from being competitive in international markets. But is that all there to it? Nay! The other major problem is gas and power shortages. And the good thing is that, while we may be far from finding a solution to those problems, a debate has at least begun on that front too.
However, one area which seems to be missing from the whole debate and discourse is Pakistan’s failure to diversify both its exports lines and export markets. And the unfortunate bit is that that problem is not even being put out there on the discourse agenda, be it in the government, the think tank circles or the print and electronic media.
Pakistan’s failure to diversify its exports lines and markets is not a problem; it’s a long pending issue that keeps hitting the country every time there is a swing in commodities. And it’s not as if that Pakistan lacks the potential. The potential is huge, which by the way is no mantra stemming from patriotic spirits.
Back when Nadeem ul Haq was heading Planning Commission, an ADB-funded McKinsey study reported that Pakistan’s export story could turn around even if it prioritizes just three sectors: horticulture, pharmaceutical, apparel. The “three priority sectors have potential to contribute 37 percent of Pakistan exports in 2014”. The study said that in 2010; sadly to deaf ears.
The point is that amid all hype of Pak-China corridor, exchange rate woes, and the need to increase power and gas supplies, the economics community must not forget about Pakistan’s diversification problem. The time to focus and act is now!
Published: September 04, 2015.
