Declining trade share

LAHORE: Pakistan made up around 0.13 per cent of global trade in 2022, showing a gradual decline from previous decades. In contrast, the trade share of its neighbouring economies, India and Bangladesh, has been steadily increasing.

India held a larger share, about 2.5 per cent, in 2022, reflecting its rapidly growing economy and global presence. Bangladesh also saw an increase, reaching 0.24 per cent of global exports in 2022, driven largely by its dominant textile industry.

Looking at the historical progression of global trade shares for these countries, it is notable that in 1990, Pakistan’s share was around 0.16 per cent, India’s was 0.5 per cent, and Bangladesh’s was about 0.06 percent. By 2000, Pakistan’s trade share remained similar, while India’s share grew to approximately 0.7 per cent and Bangladesh saw a slight increase. In 2010, India’s trade share surged to over 1.5 per cent, while Pakistan experienced minimal growth, and Bangladesh continued its ascent, particularly in textile exports.

By 2020, India’s trade share expanded further to nearly 2.2 per cent, Bangladesh exceeded 0.2 per cent, while Pakistan’s share remained stagnant. The latest data for 2023 shows India’s trade share at 2.5 per cent, Bangladesh at 0.24 per cent, and Pakistan’s at around 0.13 per cent.

India’s significant rise can be attributed to its diversified economy, while Bangladesh’s growth is largely export-driven through textiles. Pakistan, however, has struggled to maintain a strong global trade presence due to flaws in its economic policies. The country has been losing its share in global markets due to a limited product range and dependence on a few markets, leading to a constant decline in its global trade share. Successive governments in Pakistan have prioritized public-pleasing policies over prudent economic reforms. The private sector, dominated by textile tycoons, has preferred investment in the low-value-added spinning sector rather than advancing into apparel. Yarn has a ready domestic and global market that requires minimal marketing or effort, whereas the apparel sector demands significant hard work and patience. Wealthier individuals opted for the easier path, while small entrepreneurs, despite their success, lacked the capital to achieve real economies of scale.

At one time, textiles dominated Indian exports, but the sector now accounts for only 6.0 per cent of global trade. India’s leap forward came with diversification into software, pharmaceuticals, auto parts, and gems and jewellery, establishing it as an emerging player in global markets. In contrast, Pakistan has failed to diversify its exports across different sectors. Our pharmaceutical and software exports have progressed only through the efforts of individual entrepreneurs. Even in textiles, our product range is limited, and we have missed out on the blended textile market. More than 50 per cent of our exports go to the US and the EU, and we have not explored new markets, even in textiles. Bangladesh, a late entrant in textiles, serves many more destinations than Pakistan.

This poor export performance has significant implications for Pakistan’s economy, as sustained high growth rates are difficult to achieve without rapidly increasing exports. Ideally, export growth should be double the GDP growth rate. We have been focusing our efforts on trade with India, which is practically impossible without improved relations. We have neglected neighbouring countries like Iran, Bangladesh and Sri Lanka, where our trade share is even lower than our current trade with India.