Pakistan's Protectionist Policies Limit Export Growth, Hurting Foreign Reserves
-
Import substitution strategy in Pakistan has protected domestic industries but kept companies small and inefficient, unable to export competitively. This hurts foreign reserves.
-
Export promotion through incentives has also failed to significantly boost exports, due to factors like expensive inputs and overvalued currency.
-
Pursuing both import substitution and export promotion simultaneously increases costs for local manufacturers.
-
Tax policies favor import substitution over exports, as most revenue comes from imports and domestic sales.
-
Recommendations include tax incentives for exporters, getting large companies into export businesses, requiring new factories to export a share of output, and a "eat what you hunt" policy linking imports to exports.