Estimation of Export Potential for Pakistan

Fayyaz HussainEconomist

SBP IGC Seminar on " Firms and Growth" January 13, 2020, LRC SBP, Karachi

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Pakistan’s share in global exports is on decline

Source: United Nations Comtrade Database

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Egypt Bangladesh Pakistan

Percentage Share in Global Exports

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0.40

0.60

0.80

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1.60

1.80

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Turkey Egypt Bangladesh India

Malaysia Pakistan Philippines Viet Nam

Percentage Share in Global Exports

Product share of PK exports and their world counterpart

3Source: United Nations Comtrade Database

% in Pakistan total exports % in world total exports

2003-06 2007-10 2011-14 2015-18 2003-06 2007-10 2011-14 2015-18

Animal and vegetable oils, fats and waxes 0.5 0.6 0.7 0.2 0.4 0.5 0.6 0.6

Beverages and tobacco 0.2 0.1 0.2 0.1 0.8 0.8 0.8 0.9

Chemicals and related products, n.e.s. 2.5 3.4 4.2 4.3 10.5 10.8 10.6 11.5

Commodities and transactions not classified elsewhere 0.1 0.1 0.3 0.0 4.7 4.8 5.3 6.2

Crude materials, inedible, except fuels 1.9 2.8 4.4 2.9 3.2 3.6 4.0 3.7

Food and live animals 10.4 14.8 17.7 18.7 5.2 5.5 5.9 6.6

Machinery and transport equipment 2.2 3.1 1.6 1.6 37.9 35.0 32.7 36.4

Manufactured goods classified chiefly by material 50.2 43.9 42.8 41.4 14.0 13.4 12.4 12.3

Mineral fuels, lubricants and related materials 3.4 5.3 2.8 1.3 11.6 14.5 16.6 10.0

Miscellaneous manufactured articles 28.6 26.0 25.3 29.5 11.7 11.0 11.1 11.8

Highest Lowest

Methodology: Demand and Supply

We mapped Standard International Trade Classification (SITC) 3 digit codes with HS 6 digits

spanning from 2003 to 2018 and categorized HS codes and added technological classification

Sanjaya Lall, (2000) UN classification. Following the literature in international economics,

revealed comparative advantage is used for assessing exports potential.

Based on RCA, we sorted the HS codes from highest comparative advantage to the least

comparative advantage to identify the potential exports items from supply side.

From the demand side analysis, we sorted HS codes based on world’s fastest to slowest growing

imports and then identified Pakistan’s potential exports that matched with the world fast

growing demand.

RCA =XAi / XAj j

XWi/ XWj j≥ 1

Technological Classification of Pakistan’s Exports

Source: State Bank of Pakistan

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Shar

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Low technology Commodities Natural resource based manufacturing Medium technology High technology

Pakistan is loosing its comparative advantage overtime

Source: State Bank of Pakistan

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No

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item

s at

HS6

Total Exports: Items Count having comparative advantage (RCA >1 )

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No

. of

Ite

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at H

S6

Commodities High technologyLow technology Medium technologyNatrural resource base

Technological classification: Items Count having comparative advantage (RCA >1 )

Potential Export Items from Supply Side

Comparative advantage revealed in low tech and commodities

Source: State Bank of Pakistan

Woven fabrics, other...

Woven fabrics, mixed principally ...

Bedlinen and related items

Cotton yarn

Woven fabrics of cotton

Leather prepared after tanning or crusting

Matches

Leather apparel and accessories

Made-up articles of textile materials

Gloves, mittens, etc

Men's or boys' suits, ensembles, …

Men's or boys' underpants,and

similar ...

Articles for exercise, other

sports, ...

Women's or girls' suits, ensembles…

T-shirts, singlets and other vests

Babies' garments and clothing accessories

Mattress supports ...

-0.00015

-0.0001

-0.00005

0

0.00005

0.0001

0.00015

-20 0 20 40 60 80 100 120 140 160 180

Wo

rld

dem

and

ch

ange

(la

st 5

yea

rs)

RCA( last 10 years)

Supply Side

Bubble sizerepresents share in world trade

High Tech, Commodities, Medium tech, Low Tech, Natural Resource

Potential Export Items from Demand Side

World demand is rising faster for high and medium tech exports

Source: State Bank of Pakistan

Electronic integrated circuits

Telephone sets

Human and animal blood

Parts of aircraft and spacecraft Medicaments

Footwear

Women's or girls' suits, ensembles, jackets, etc…

Jerseys, pullovers, and similar articles

Men's or boys' suits, ensembles, jackets, etc…

Motor cars and vehicles

Parts and accessories for larger motor vehicles

Turbojets, turbopropellers and other gas turbines

Instruments /appli. for medical purposes

Polyacetals, other polyethers Ceramic sinks, washbasins, etc

Dates, figs, guavas, mangoes, etc,

Oils and other products

-0.05

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0.15

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0.25

-5 0 5 10 15 20 25 30

Wo

rld

dem

and

gro

wth

(la

st 5

yea

rs)

RCA (last 10 years)

Demand SideBubble size represents share in world tradeHigh Tech, Medium Tech, Low Tech,

Commodities, Natural Resource

Conclusion

With the given production structure, Pakistan has the potential to double its exports

Most of this potential lies in labor intensive low tech products- good for employment

Thank You