According to Pakistan’s Economic Survey 2018-19, de-industrialization has continued since 2008. During the last decade, large-scale manufacturing lost 2.1 percentage points of its share in GDP. It is not thus surprising that the Total Factor Productivity (TFP) growth has decreased substantially during the period 2008-15 to 0.6 percent from 2.4 percent in the 1980s and 1.8 percent in 2000s. The share of manufactured exports has also declined from 18.8 percent in 2012-13 to 16.6 percent in 2017-18, which implies erosion of 2.2 percentage points share in total exports.
In view of the above, there is a need to adopt a plan for industrial policy that coordinates effectively between the private and public sectors and supports an incentive structure that encourages competitiveness. It merits a mention that the country’s industrial policy hinges upon SME sector development by targeting infrastructure, skill training, development of common facilities, and technology investments. To provide impetus to the SME sector and enhance its competitiveness, a separate SME development policy is to be designed to boost their productivity and build their capacity to gain an edge in the international market.
Khan Faraz
Peshawar