A Strategy for Foreign Economic Policy
Haider, S. M., Economic Review
A Strategy for Foreign Economic Policy
With the restoration of democracy in Pakistan efforts are being made to evolve foreign economic policies in consonance with the present needs and challenges of Pakistan society. The Government of Pakistan is cognizant of giving a new shape to the foreign policy pertaining to the political economy so that Pakistan can conveniently enter the 21st century. It is, therefore, desirable that a new format for foreign economic policies is developed which can place the Pakistan society on sound footings.
Trade with less developed and developed countries has grown increasingly in importance in Pakistan which is contributing to an enhancement in the level of exports. Export diversification is being encouraged in Pakistan. Comprehensive reforms are being made in agricultural trade giving rise to expanded market access for goods. Much, however, remains to be done. Protectionist policies do operate as a major impediment to trade. It seems that tariffs are still high. Non-tariff barriers are more insidious than tariffs because they remain largely hidden. Free trade, if promoted to the desired extent, can lead to robust economic growth by fostering competition and to an efficient allocation of scarce resources. It will benefit Pakistan by providing cheaper rise in unavailable products. Exports will allow Pakistan to enjoy the benefits of imports by earning the foreign currency needed to pay for them. Further reductions in existing restrictive practices would increase both the volume of trade and real incomes worldwide.
Trade protection has emerged in Pakistan as commanding attention of economists and policy makers. Protectionist policies cannot solve the trade deficit, as it is largely due to macro-economic forces. Prime Minister Nawaz Sharif feels that the trade policy in Pakistan rests firmly on the foundation of free and open markets. Hence the nation will oppose protectionist policies because Pakistan's growth in future will depend on trade. Fresh efforts have to be made to improve market access including specialized negotiation to reduce barriers to trade in tropical products, internal resource base products and textiles. The nation also expects the final package to include agreement in services, trade related investment measures, and production of trade related intellectual property.
The policy makers in Pakistan are becoming conscious of the need to improve savings and investment patterns, export promotion work force training and education, research and development, and corporate behaviour. A need is being felt for steps to stimulate industrialization, employment, and privatization. This is because Pakistan shares with other developing countries the costs of promoting development.
Export is a vital part of the economy in Pakistan. They provide jobs and enable Pakistan to import vital goods to meet domestic demands. The Government seems to be interested in ensuring that exports are consistent with the foreign policy. Quite a few controls apply to equipment and technology of importance to the economy of the country.
A new strategy in regard to the promotion of foreign economic policy could be aimed at reforming the structure and growth of economic system. A second element could be a new approach to commercial bank lending. A third element comprises credits from international financial institutions that are linked more closely to reforms. Economic reforms permit market forces and private enterprises to play a larger role in the economy, encourage greater savings and investment, reduce budget deficits, and liberalise trade and financial systems. The Government may find it useful to promote market-oriented international investment, free of discriminatory treatment, that impedes or distorts investment and related trade flows. It may also find it useful to welcome foreign investment and extend to it the same treatment that it seeks for Pakistan investors abroad. …