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The Textiles and Garments Sector: Moving Up the Value Chain

Author

Listed:
  • Naved Hamid

    (Director, Centre for Research in Economics and Business, Lahore School of Economics.)

  • Ijaz Nabi

    (Visiting faculty, Lahore University of Management Sciences (LUMS) and Country Director, International Growth Center (IGC).)

  • Rafia Zafar

    (Former research assistant, Centre for Research in Economics and Business, Lahore School of Economics.)

Abstract

The textiles and garments (T&G) sector accounts for almost 50% of Pakistan’s exports and is the largest component of manufacturing. T&G sector, because of recent favorable developments for the industry in Pakistan and the expected future changes in the international trade structure for the sector, has the potential to play an important role in expanding Pakistan’s exports. In addition, garments manufacturing is the least energy and capital intensive industrial activity and thus resonates with Pakistan’s resource endowment to generate economic growth and employment. Garment manufacturers have tried to overcome the constraints arising from the energy shortages and adverse security and country risk perceptions by investing in power generation, upgrading IT, developing design and R&D capability. Punjab Government’s focus on garments as a central plank of its industrial strategy has also helped. However, this paper argues that for the sector to fully realize its potential, government policies that shape the incentive structure faced by the industry need to be re-aligned In this regard, the most important is Pakistan’s import policies and customs procedures that discourage the import of materials such as synthetic yarn and fabric, technical textiles and specialized trimmings and accessories needed by exporters to move up the value chain, and a significant bump up in the growth trajectory will only take place if import policy and custom procedures are substantially reformed. This paper focuses on the following themes: First, structural changes and trends in T&G exports; second, the associated constraints to growth of the garments sector; and third, to highlight some of the steps taken by the industry leaders in terms of policy reforms and by firms, particularly with regards to managing resources to enhance competitiveness.

Suggested Citation

  • Naved Hamid & Ijaz Nabi & Rafia Zafar, 2014. "The Textiles and Garments Sector: Moving Up the Value Chain," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(Special E), pages 283-306, September.
  • Handle: RePEc:lje:journl:v:19:y:2014:i:sp:p:283-306
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    Citations

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    Cited by:

    1. Nazia Nazeer & Rajah Rasiah, 2016. "Explaining Pakistan’s Premature Deindustrialization," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 351-368, September.
    2. Mubshar Hussain & Muhammad Haider Abbas & Abdul Majeed & Waqas Ahmed Minhas & Shahid Farooq & Khawar Jabran, 2022. "The Influence of Different Row Spacing and Weed Control Intervals on Weed Infestation and Yield-Related Traits of American ( Gossypium hirsutum L.) and Desi ( Gossypium arboreum ) Cotton," Sustainability, MDPI, vol. 14(16), pages 1-13, August.
    3. Ayesha Javed & Rao Muhammad Atif, 2021. "Global Value Chain: An Analysis of Pakistan’s Textile Sector," Global Business Review, International Management Institute, vol. 22(4), pages 879-892, August.
    4. Ayşegül Toy & Ayhan Kapusuzoğlu & Nildağ Başak Ceylan, 2022. "The Effect of Working Capital Management on the Performance of the Textile Firms: Evidence from Fragile Five Countries (FFCs)," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 7(4), pages 814-838.
    5. Jaffar Abbas & Qingyu Zhang & Iftikhar Hussain & Sabahat Akram & Aneeqa Afaq & Muhammad Afzal Shad, 2020. "Sustainable Innovation in Small Medium Enterprises: The Impact of Knowledge Management on Organizational Innovation through a Mediation Analysis by Using SEM Approach," Sustainability, MDPI, vol. 12(6), pages 1-19, March.
    6. Naved Hamid & Maha Khan, 2015. "Pakistan: A Case of Premature Deindustrialization?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 107-141, September.
    7. Khalil Hamdani, 2015. "Globalization: The Challenge for Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 225-240, September.
    8. Theresa Thompson Chaudhry & Mahvish Faran, 2016. "Same Jeans, Same Stitch? A Comparison of Denim Production Across Three Factories in Punjab, Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 211-236, September.
    9. Enrico Fontana & Muhammad Atif & Huma Sarwar, 2024. "Pressures for sub‐supplier sustainability compliance: The importance of target markets in textile and garment supply chains," Business Strategy and the Environment, Wiley Blackwell, vol. 33(5), pages 3794-3810, July.
    10. Rajah Rasiah & Nazia Nazeer, 2016. "Comparing Industrialization in Pakistan and the East Asian Economies," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 167-192, September.

    More about this item

    Keywords

    Pakistan; exports; textiles; garments; international trade; growth; global value chain.;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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