Social Versus Private Profitability in Pakistan's Export of Manufactures

Khalid Ikram


A recurrent theme in much of the writing on development is
that the prospects for the export of agricultural products from
underdeveloped countries are bleak, and that these countries should,
therefore, concentrate on expanding their exports of manufactures.
Pakistan, too, has not been immune to such thinking, and over the years
the authorities have attempted to stimulate industrial exports through a
wide array of incentive schemes. On the one hand these" took the form of
discouraging agricultural exports by the imposition of export taxes and
by compelling the sale of these products at the official—and overvalued
—exchange rate. On the other hand, the manufacturing sector was given a
much more favourable exchange rate by way of the Export Bonus Scheme,
was permitted to purchase its imported component at an artificially low
rate through the Export Performance Licensing Scheme, and was exempted
from taxation on exports. In addition, businessmen were permitted
foreign exchange at the official rate in order to travel abroad to make
contacts and conduct market surveys, export credit guarantee schemes
were drawn up for manufactured products, while government-financed
participation in foreign trade exhibitions was chiefly designed to
provide a shop window for the products of industry.

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