Pakistan’s value addition gap: why cheap labour alone won’t deliver

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Lahore: Pakistan produces low value added goods not only because of low wages, but because of strategies, investment and value -chain integration. The example of Vietnam shows that the value edition is from policy vision, infrastructure, training and commercial communication.

All countries, which are able to increase value, have made concrete efforts to aggressively integrate with global markets. One of the reasons is that Pakistan is continuing to export low-cost products: Economic migration: Many developed and now some developing-economies have turned away from such products for various reasons. Increasing labor costs have made low margins, labor -filled goods unbearable. These countries have turned their attention to innovation, high -tech manufacturing and services.

Pakistan’s comparative advantage in cheap labor (compared to developed countries and China) makes it more possible to manufacture goods at the end. However, only cheap labor does not ensure competitiveness or stability, as has been seen in the case of Vietnam. Vietnam has shown that low wages are not the only element of success. Compared to Bangladesh and near India, it has just eliminated many people.

The Vietnamese government’s active policies attracted the FDI, especially from South Korea, Japan and China. Vietnam acquired better trade agreements such as European Union Vietnam FTA, CPTPP and RCEP. The second advantage is its strong infrastructure, which is better than Pakistan and often India. Vietnam has integrated into the global economy by improving its business and setting special economic zones. These measures have helped embed themselves in global value chains, especially electronics and high -end costumes.

Beyond textile, Pakistan also exports other products. It has a niche in surgical devices, but it is mostly mid -manufacturing (OEM manufacturing). Similarly, exports of its shoes and leather equipment are mostly at the end (semi -processed leather instead of branded fashion products). Software and IT services have recently begun to flourish with some medium -sized offerings, but nothing in terms of exports or standards in India. Pakistan’s electronics exports are extremely limited and not high-tech-generally at the assembly level. Most of these exports, with the minimum brand ownership or design, are still at the low to medium -sized price.

Pakistan textile and other exports have the capacity to add high price. In textiles, an important part of exports still contains yarn and grading fabric, which is at a lower price. Apparel’s exports are focused on unreasonable and basic items (eg, T -shirts, towels, socks). Competitive countries have moved to fashion garments, sportsware, technical textiles and branded products.

To upgrade its textile, Pakistan needs strong design and branding capabilities like Bangladesh, which cooperates with Western buyers and faster with local designers. Businesses have to invest in fashion technology, R&D and artificial fibers. The industry also needs to improve the quality of compliance and stability of the app to access premium markets. These measures will help textile firms connect with global retail and sharp fashion chains.

There is a dire need to promote textile workforce beyond cheap labor. This sector must produce technicians, patterns, and merchandisers – the role that usually pays more than the industry than the payment of its textile labor force. Even in Bangladesh, high -end skills get better wages.

Many reasons explain why the value edition is behind in Pakistan. The main problem is the absence of long -term industrial policy. Energy and logistics barriers have disrupted business planning. Poor harmony between industry, academia and the government has also stopped innovation. Limited FDI’s arrival – often regulatory unexpected and results of security concerns – which has resulted in the upgrades of technology and not equal investment in design development. Only and only wages will never provide the race if other important activists of development are missing.