Pakistan export initiative

Pakistan is exploring an export initiative, but it remains unclear whether this exists or is merely a concept. Notably, there is an initiative for remittances, yet no similar strategy for exports. Remittances are on the rise, while exports are stagnant. The question arises: are exports declining due to poor policies or because of them?

Is the increase in remittances a result of good policies or not? The focus here is not to criticize the remittance initiative or its continuous push, but to underscore the importance of giving exports higher priority in policy decisions, as they hold more potential for economic growth than remittances. This article emphasizes boosting exports rather than decreasing remittances.

Both export and remittance growth contribute to the current account deficit. Exports stem from agriculture, industry, and services sectors, which create employment and impact the economy indirectly through household spending. Remittances, on the other hand, follow overseas earnings or savings of Pakistani workers and are partly sent back home.

While both help fill the current account gap, the growth impact of exports is direct and indirect, while remittances are only indirect. The crucial point is that raising exports to boost productivity is vital for growth, which is not the case with rising remittances. Prudent policies promoting exports can lead to long-term sustainable growth, while increasing remittances may not achieve the same result.

Exporting exposes domestic firms to international competition, management practices, quality standards, supply chains, and technologies, often resulting in higher productivity and gains. Studies show that a 10% increase in exports across countries correlates with higher employment, earnings, and productivity. Another important factor is that exports precede production and employment rise, as well as indirect consumption-driven spending by export-related workers' wages.

In contrast, remittances' economic impact follows remittance receipt. Therefore, prioritizing sustained export growth would create more jobs and alleviate the desperation of unemployed individuals seeking employment overseas. Moreover, boosting exports would enhance the economy's productivity, a crucial need. Remittances should not be viewed as a replacement for exports, as they should continue to be promoted.

Exports should be encouraged more vigorously than remittances for growth. The export-to-GDP ratio peaked at 17.3% in 1992 but has since declined to 10% in 2025 due to economic crises and imprudent policies. Remittances have also risen as a proportion of GDP, indicating that exports respond positively to prudent policies, while remittances show autonomous growth.

Banking infrastructure refinements have aided remittance growth, but economic policies also contributed to the push for unemployment abroad. If policymakers focus on prudent policies to avoid crises, exports as a proportion of GDP could have grown faster than remittances. The export-to-GDP ratio could have reached 17.3% in 2026, compared to the current $41bn export value (FY26 State Bank data).

Frequent balance-of-payments crises have clouded policymakers' judgment, leading to a policy focus on foreign exchange earnings or inflows rather than sustainable growth and long-term benefits.