COMPARATIVE ADVANTAGE OF PAKISTAN IN SELECTED MANUFACTURING INDUSTRIES: THE RCA APPROACH

Shujaat Abbas


DOI: http://dx.doi.org/10.22555/pbr.v19i3.1630

Abstract


The trade balance of Pakistan has witnessed considerable
distortion in recent decades due to globalization induced increase
in international competition. The success of a nation in this highly
competitive global market is dependent on comparative
advancement in production specialization in diversified industries.
The imports of durable and non-durable consumer goods account
for a large part of imports which can be avoided by developing
these industries. This study investigates international
competitiveness of Pakistan with respect to the world in 11 industries
of manufacturing sector that have weak domestic industrial base
and large domestic consumption/demand, i.e. pharmaceutical
products; fertilizers; essential oils, perfumes and cosmetics; soaps
and lubricants; plastics and articles thereof; leather articles; paper
and paper products; wood and articles of wood; ceramics; glass
and glassware; and toys and sports good, using RCA index on 2
digit HS-level data. The result revealed that among the selected
manufacturing industries, Pakistan has a higher comparative
advantage only in leather articles, toys, and sports goods, whereas,
other industries are showing higher competitive disadvantage. The
overall international competitiveness of selected industries is also
depicting a deteriorating trend which requires that the production
problems and international trade issues required for diversifying
the production base in the country need to be addressed.


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