Commodity Exports, Net Exchange Earnings and Investment Criteria

Nurul Islam


Pakistan has experienced in the last decade a significant rate
of growth of exports, especially of the manufactured exports. The
manufactured exports have grown at an annual compound rate of 15 per
cent during the period 1960-67. This significant rate of growth of
exports has been associated with a large number of export-promotion
measures which have ranged from a wide variety of fiscal concessions to
such export-incentive schemes as the export bonus and export performance
licensing as well as the fixation of compulsory export quotas for the
individual manufactured exports. The question has been raised from time
to time as to the efficacy of the export-promotion measures in terms of
the net foreign-exchange earnings, denned as the actual increase in
export earnings from a unit of export minus the direct and indirect
requirements of imports necessary for the production of the unit of
export. Since one of the important criteria for the determination of the
investment priorities in the field of industry in Pakistan has been the
foreign-exchange saving or earning capacity of a particular industrial
project [9, p.51], it is important to quantify the contributions to the
net foreign exchange earnings made by the exports of the different
manufactured goods. Moreover, it is possible to judge how the existing
structure of the export incentives is related to the net
exchange-earning capacity of the different industries.

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