Trade liberalisation in Pakistan, intended to enhance exports and integrate the country into the global economy, has created a paradox. Instead of boosting local industries, it has led to an influx of cheaper imports, which undermine the competitiveness of domestic sectors. While reduced tariffs and trade barriers have made imported goods more accessible, many local industries have failed to improve their efficiency and innovation, resulting in a loss of both foreign and domestic market share.
Protected industries, once reliant on subsidies and tariffs, now face fierce competition from imports in sectors like electronics, machinery, and consumer goods. The reduction of these protections has exposed their inability to compete with higher-quality, more cost-effective imported products. Without modernisation or the adoption of global best practices, these industries struggle to keep up, eroding their market position and discouraging investment in technological advancements.
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Furthermore, Pakistan’s export growth has been hindered by a lack of value-added products and inefficient production systems, which fail to meet international standards. High business costs, such as energy, logistics, and regulatory issues, further reduce the competitiveness of local industries. Inconsistent policies, political instability, and inadequate infrastructure worsen these challenges, contributing to an expanding trade deficit and a decline in the manufacturing sector’s contribution to GDP.
Pakistan’s economic growth is also stifled by corruption, weak institutions, and insufficient focus on small and medium-sized enterprises (SMEs). The country lags in education and skill development, particularly in technical fields, limiting the potential for high-growth industries. To address these issues, Pakistan must implement industrial policy reforms, focusing on export-oriented sectors such as textiles, IT, and engineering goods, while investing in innovation, research, and development.
In contrast, countries like India and Bangladesh, which liberalised later, have made significant strides by adopting strategic reforms, focusing on education, and strengthening governance. Pakistan’s early liberalisation, however, lacked a comprehensive strategy, leaving domestic industries unprepared to compete globally.
