Degree

Master of Science in Economics

Faculty / School

School of Economics and Social Sciences (SESS)

Department

Department of Economics

Date of Submission

2025-11-13

Supervisor

Dr. Aadil Nakhoda, Assistant Professor and Research Fellow-CBER, Department of Economics

Project Type

MSECO Research Project

Access Type

Restricted Access

Keywords

Textile Industry, Industrial Policy, Value Chain Upgrading, Trade Preferences, Comparative Development

JEL Code

F13, F14, L67, O14, O25, O53, F61

Abstract

This research focuses on the divergent paths of developing the textile industry in the developing economies in an effort to identify policy and institutional reasons behind the poor performance of Pakistan in terms of resource endowments that are similar. The 135-158% increase in exports between 2014-2024 has occurred in Bangladesh and Vietnam, whereas Pakistan saw a 19% growth in export, which is a cost of $5-7 billion versus exporting other products, which is a value of opportunity considering that it is the fourth-largest cotton producer in the world and has established manufacturing capacities.

The study uses comparative case study analysis of five peer economies (Bangladesh, Vietnam, India, Turkey, and Ethiopia) to determine four general determinants of textile export success, including institutional coherence with coordinated policy, reliable infrastructure focusing on energy stability, systematic value chain upgrading of simple manufacturing to garments and design, and responsive policy frameworks to implementation feedback. The ineffective governance system, unstable energy supply (0.14/kWh compared to 0.07-0.08 in competitors) and continuous orientation on low-value yarn/fabric (63% of exports) justify the deterioration in the competitiveness of Pakistan.

The research uses mixed methods that integrate both quantitative analysis of trade data (2008-2023) and primary firm level evidence of fifteen Pakistani textile exporters in large production clusters. The quantitative evaluation of the EU GSP+ experience in Pakistan shows that preference access to the market brought about only 45 percent nominal increase in exports as compared to 110-150 percent in the experienced countries, and gains were negated by the regulations of origin, compliance costs and domestic limitation. The main outcomes of the survey show that there is three-step attenuation: 100% GSP+ awareness, 67% active use, and only 40% of seeing net benefits greater than compliance costs. Eighty seven percent of companies found energy disruptions to be a strong constraint and 93 percent of the companies found that government support of infrastructure and refunds was inadequate.

The results indicate that the preferences of trade policy cannot replace the procedure of home-building capability. The reform that Pakistan needs is at the ecosystem level: the creation of a single textile authority in the form of Pakistan Textile Development Authority, Textile Priority Zone with guaranteed competitive energy prices, a shift of garment share to 45% with a tiered incentive, the creation of a system of compliance certification, and the systematic establishment of compliance certification capacity. The study adds empirical research on the mediation role of domestic constraints on the effectiveness of trade policy and offers practical suggestions to regain the competitiveness of the Pakistani textile industry by engaging in both institutional restructuring and selective industrial modernization.

Pages

xi, 66

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