Pakistan's Trade Policy Needs Overhaul Beyond Targets, Focusing on Governance and Diversification
Pakistan is preparing its Strategic Trade Policy (STP) for 2026-2031, presenting an opportunity to fundamentally rethink its export strategy by addressing past implementation failures. The policy's success hinges on improving governance and institutional effectiveness, which have historically hampered previous strategies. For instance, the STP 2015-20 aimed for $35 billion in exports but achieved only $20.5 billion, and the STP 2021-26 targeted $57 billion by 2025, reaching just around $32 billion. A thorough analysis of these shortfalls is crucial, distinguishing between policy missteps and external shocks like the COVID-19 pandemic and geopolitical conflicts. Domestic factors, including an overvalued currency between 2013 and 2018, contributed to stagnant exports and a decline in their share of GDP.
The recurring shortfall in Pakistan's export targets underscores a persistent challenge in translating policy ambition into tangible economic outcomes. This situation highlights a critical need to move beyond setting aspirational figures and instead focus on the foundational elements of effective trade policy: robust governance, institutional capacity, and consistent implementation. The analysis suggests that a lack of diversification, particularly in moving towards higher-value and technologically advanced products, limits Pakistan's ability to capitalize on global market growth. Future policy formulation should therefore prioritize not just export volume, but also the development of competitive domestic industries capable of integrating into global value chains. Addressing structural impediments like regulatory complexity, energy costs, and access to raw materials, alongside a realistic assessment of global trends such as AI and climate change, will be essential for sustainable export growth over the next decade.
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