Pakistan’s competitive advantages in six key areas

By: Sourajit Aiyer

An advance in annual gross domestic product of around 3% in recent years does not reflect the true potential of Pakistan, a country of 180 million. While recent positives highlighted in the second review of the IMF during its assistance programme for the country suggest the economy is taking constructive shape, a lot is still needed to sustain and enhance that momentum.

The number of graduates and professionals is increasing each year. If job creation fails to keep pace with talent supply, then the youth’s restlessness and frustrations with the establishment will only increase. Once an organised job market brings in more people within its fold and income sustains a northward trend, the community’s purchasing power rises and creates more demand.

Apart from jobs, recent newsflow suggests key challenges facing the economy are: boosting exports, increasing foreign direct investment (FDI), reducing dependence on foreign assistance through fiscal self-sufficiency, and converting into a more producer-oriented nation.

These challenges are already known to everyone. Potential solutions are also known. But how can the economy utilize this improving climate to hasten the economic advance? At such stages, it is imperative to identify and build upon areas of ‘competitive advantages’.

These are areas where a country already has some inherent resources, which act as a foundation. Thereafter, once it invests to further develop the talent, processes and competencies of these sectors, they have the potential to grow much faster than other sectors.

This helps it to become a producer-nation of choice in the global arena in those areas. The aim is to become specialists in areas of competitive advantages so that it becomes a country of ‘first-recall’, or at least ‘initial-recall’, when foreign partners are looking to source or invest.

Most importantly, these build brand for the country, and if one looks at the global context, it is critical to create branding in today’s competitive age. Branding creates relevance and recall.

Experience of emerging markets shows India did it in the IT/software sector, Taiwan in chips/semiconductors, China in hardware manufacturing, etc. This enhances opportunities for sustained economic growth, investing into mass job creation, and meeting the changing aspirations of its people.

Pakistan already has competencies in textiles, home furnishings, primary products etc. But it needs more to achieve the economic magnitude required for a country its size. In the next pages are six areas where I think the country can convincingly build competitive advantage.

2 thoughts on “Pakistan’s competitive advantages in six key areas

  1. Sourajit Aiyer

    Dear Sir,
    Thank you for your comments. It was encouraging to note that my thought-process on the topic was more or less in the right direction. I had narrowed on these 6 areas based on initial research and reading and thereafter, some drill-down thinking and deliberation with ideas that get formed in the process. Perhaps you might have some advice on how to convey this article and its 6 areas across to Minister Ishaq Dar or Minister Khurram Dastagir. I had written a similar note on Bhutan as well, based on observations made during the personal visit in Jan. The Bhutan piece was also posted by Ms Antonia Oprita on http://www.marketmoving.info. You might find that piece interesting read as well. In fact, I have been researching on some preliminary points on Bangladesh market since early-May. Hopefully might be able to finalize it soon. Thanks again for your comments.
    best regards
    Sourajit Aiyer

  2. Mohsin Khan

    The focus of the Pakistan government has been exclusively on the current problems plaguing the economy–energy, public finances and external imbalances. As such, economic policies have been geared to these immediate problems and only limited attention has been paid to long-run economic development of the country.
    Determining Pakistan’s competitive advantage is exactly the way to design a long-term economic strategy. The areas identified by Sourajit Aiyer are the ones that the Government of Pakistan, and particularly the Planning Commission, should be looking at seriously. I would add in IT where there is a booming cottage industry that needs to move up in scale. Pakistan also has cost advantages in manufacturing because of low wages and a favorable exchange rate. It lacks raw materials and inputs, but hopefully opening up trade with India will result in cheaper inputs.
    I hope that policymakers and businessmen will see the long-run potential of Pakistan and act to realize that potential.

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