What are the Factors Making Pakistan’s Exports Stagnant? Insight from Literature Review

Abstract

Lowering exports is considered as one of the paramount reasons of widening trade deficit of Pakistan, which has become a long-standing challenge that country is facing since the beginning of the century. During the last two decades, the contribution of exports in GDP has been declined from 16 to 10 percent (World Bank, 2021). If we look at Pakistan’s share in global trade, it is dropped from 0.15 percent in 2005 to 0.12 percent in 2021. Export competitiveness of Pakistan is shrinking, while the competitors like Bangladesh, India, and Vietnam are experiencing expansion in export competitiveness. The stagnancy in Pakistan’s exports brings about a number of challenges like increasing current account deficit, burden of foreign debt, exchange rate, and other macroeconomic problems (Government of Pakistan, 2021-22; Defever, et al. 2020). Various reasons of declining export are suggested by the economists and researchers. To gather concrete evidence, a comprehensive desk review or literature review is required to unleash what factors are bringing down Pakistan’ exports. For that purpose, the underlying piece of research aims to weave up a review of existing literature on exports and unfolds the significant factors which influence exports. Low productivity of firms, weak export competitiveness, lack of value addition & innovation, complex & inefficient incentive mechanism, limited export destinations, and low R&D at the firm level are the key causes for stagnant exports. During the ongoing economic crisis, quick and rigorous strategies are required to find out the potential markets considering a match with exportable products.