Pakistan : Unlocking Private Sector Growth through Increased Trade and Investment Competitiveness
Evidence suggests that Pakistan has the potential for much faster and more diversified economic growth. Energizing trade can help Pakistan to realize its growth potential. Pakistan’s inward-oriented trade policies have had the effect of stalling Pa...
| Main Authors: | , |
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| Format: | Technical Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/690221570175003187/Pakistan-Unlocking-Private-Sector-Growth-through-Increased-Trade-and-Investment-Competitiveness http://hdl.handle.net/10986/32504 |
| Summary: | Evidence suggests that Pakistan has the
potential for much faster and more diversified economic
growth. Energizing trade can help Pakistan to realize its
growth potential. Pakistan’s inward-oriented trade policies
have had the effect of stalling Pakistan’s integration into
regional and global value chains (GVCs). Pakistan’s failure
to reform its trade policy to better foster export
competitiveness can be attributed in part to institutional
fragmentation within the government. This fragmentation has
resulted in different agencies sometimes working at cross
purposes. Efforts to reduce tariffs have been offset by the
introduction of alternative protection instruments such as
regulatory duties (RDs) and firm-specific special regulatory
orders (SROs). In addition to tariffs, RDs and SROs, other
obstacles to global integration include a heavy regulatory
burden and perceived risks to investing and operating in the
country, which have hurt efforts to attract foreign direct
investment (FDI). Growth and competitiveness are also
inhibited by inefficient trade facilitation policies, weak
logistics services, and underdeveloped infrastructure. These
constraints have made it difficult for Pakistan to fully
exploit its proximity to China, a trade powerhouse, with
which it has a free trade agreement. All in all, the
anti-export bias of Pakistan’s trade policy has made it more
difficult for outward-looking firms to grow by accessing
global markets. A series of actions in the areas of trade
policy, trade facilitation and connectivity, and
institutional coordination could potentially stimulate
Pakistan’s growth through increased trade and investment
competitiveness. Integration with other countries in the
region and neighboring regions, particularly East Asia, will
allow Pakistan to diversify both its product basket and
markets. Finally, full normalization of trade relations with
India would allow Pakistan to benefit from India’s fast
growth and promote complementarities, including valuechain
activities and investment potential. |
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