Trade Diplomacy Essay

15321 WordsFeb 18, 201362 Pages
Trade Diplomacy and Strategy for Export Growth of Pakistan By m.f. baig EXECUTIVE SUMMARY Trade diplomacy and strategy for export growth of Pakistan is in line with the Ricardian philosophy of gains from trade irrespective of whether absolute advantage in trading particular goods and services exists or not. Trade diplomacy has been identified as a strategy to enhance exports and hence contribute in domestic economy by way of capital accumulation, employment generation and economic development. This paper highlights trade diplomacy as a strategy for export growth but also emphasizes that such diplomacy would not make any significant contribution unless the supply side and demand side constraints in export are addressed simultaneously. Therefore, the problem that needs to be addressed is that “whether trade diplomacy alone can achieve higher exports for Pakistan?” This paper focuses on a holistic policy mix for export growth. Pakistan’s checkered political and economic history has not enabled consistent trade policy formulations. Therefore trade diplomacy has not been utilized as an effective tool during 1947 – 1970 period. Pakistan started with an overall economic trade policy of import substitution. Therefore, trade in the initial years was geared towards exports of primary products mainly raw cotton and jute and any surplus gained was utilized for domestic industrialization. A policy shift from import substitution industrialization towards export promotion was witnessed after 1980s. It was with this policy shift that a role for trade diplomats was created. However, supply side (law and order, war on terror, power shortage, bureaucratic corruption, infrastructural inadequacies, allocative inefficiency) and demand side constraints (recession in the world economy, dependence on primary product, diversification of export mix, erosion of

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