Export Diversification Potential and Structural Transformation in Pakistan: A Product Space Perspective

Abstract

Structural transformation is characterized by successful industrialization with continued growth in both manufacturing and service industry. It creates lot of job opportunities by exploring unexploited industries that leads to sustainable economic growth and higher standard of living. Industrialization requires systematic and strong coordination mechanism geared with committed leadership. Industrialization in Pakistan has been partially successful and faced with many challenges. In this regard, product space analysis was conducted to thoroughly assess Pakistan’s opportunity space and challenges for future industrialization. To this end, various priority sectors were identified given their compatibility and proximity with Pakistan’s production capacity and finally an appropriate industrial policy is recommended for future course of industrialization. This study is greatly helpful for government policy makers to formulate feasible industrial policies in accordance with the productive capability of Pakistan, for potential investors and entrepreneurs to venture into potentially viable business opportunities and for academics to better understand the dynamics of industrialization.