Although enhancement in the economy's productivity and the right/competitive exchange rate of the currency are believed to be the major factors behind the expansion in exports, yet the observations of Azeem Khan and his emphasis on value addition, in our view, also deserves proper attention by the policymakers. This is especially so when stagnation in value addition in the export sector had become one of the key challenges facing Pakistan and causing balance of payment problems. It is very sad to note that value addition in Pakistan is merely a 2-3 percent at present instead of 12 percent ideally required to secure a place in high-level markets offering good returns. The country is generally constrained to export low-cost raw materials instead of creating an efficient enabling value chain with back and forth support to related products. This could be one reason why during the last few years, Pakistan's exports have either stagnated or recorded a negative growth. Although exports have posted a double-digit growth during the current fiscal after a long period of 7 years, this is mainly attributed to the export package of Rs 180 billion, improvement in energy supplies, recent depreciation of the rupee and a significant recovery in the global commodity prices. No mention is made of improvement in quality of the exportable products which could fetch handsome returns and help diversify the export markets. This could not be done in the absence of a necessary environment. Some of the factors which are very important for value addition include sound educational background, practical research, high level of skills and dedication to work, adequate investment, availability of venture capital and abundant entrepreneurship. Pakistan also lacks the necessary infrastructure to innovate and move ahead. It could be argued that value addition is a difficult proposition in a country which has been even unable to diversify its markets and products at the international level for a long time. However, as highlighted by Azeem Khan, we cannot belittle the role of value addition in this modern age to expand our exports. It needs to be mentioned that Planning Commission is about to finalise its 12th Five-Year Plan and it would be in the fitness of things if it devotes enough resources to give the needed attention to this issue.
Although enhancement in the economy's productivity and the right/competitive exchange rate of the currency are believed to be the major factors behind the expansion in exports, yet the observations of Azeem Khan and his emphasis on value addition, in our view, also deserves proper attention by the policymakers. This is especially so when stagnation in value addition in the export sector had become one of the key challenges facing Pakistan and causing balance of payment problems. It is very sad to note that value addition in Pakistan is merely a 2-3 percent at present instead of 12 percent ideally required to secure a place in high-level markets offering good returns. The country is generally constrained to export low-cost raw materials instead of creating an efficient enabling value chain with back and forth support to related products. This could be one reason why during the last few years, Pakistan's exports have either stagnated or recorded a negative growth. Although exports have posted a double-digit growth during the current fiscal after a long period of 7 years, this is mainly attributed to the export package of Rs 180 billion, improvement in energy supplies, recent depreciation of the rupee and a significant recovery in the global commodity prices. No mention is made of improvement in quality of the exportable products which could fetch handsome returns and help diversify the export markets. This could not be done in the absence of a necessary environment. Some of the factors which are very important for value addition include sound educational background, practical research, high level of skills and dedication to work, adequate investment, availability of venture capital and abundant entrepreneurship. Pakistan also lacks the necessary infrastructure to innovate and move ahead. It could be argued that value addition is a difficult proposition in a country which has been even unable to diversify its markets and products at the international level for a long time. However, as highlighted by Azeem Khan, we cannot belittle the role of value addition in this modern age to expand our exports. It needs to be mentioned that Planning Commission is about to finalise its 12th Five-Year Plan and it would be in the fitness of things if it devotes enough resources to give the needed attention to this issue.