The case for export-led growth

Pakistan’s development history has been in a state of crisis for decades. One major factor underlying this struggle is an imbalance in the balance of payments that can only be corrected through enhanced foreign exchange earnings via exports. Currently, the economy relies on unsustainable sources such as remittances, foreign loans, and tariffs, along with indirect taxes, to support a heavily import-based economy. Pakistan is among the seven most trade-averse countries in the world, with the highest average tariff among 70 countries, and there is a strong inclination toward import substitution in its economic policies. Industries such as automobiles, fertilisers, and capital inputs are protected with tariffs as high as 500 per cent on imports. Pakistan’s adherence to this protectionist model has not provided solutions to the various macroeconomic crises, which include an unsustainable debt burden, high inflation, and increasing poverty.