Promoting Exports Chapter 16: Promoting Exports Large and growing exports, along with higher savings and tax revenues, are the pre­requisites for fast and sustained growth in the economy. Rapid growth in exports is essential to keep the current account deficit in the balance of payments under control without the need to resort to severe measures for import compression and reduction in GDP growth as Pakistan has witnessed from 2018-19 onwards. This chapter on promoting exports first focuses on the performance of exports and the trends in the level of determinants of exports. This is followed by identification of changes in the commodity-wise composition of exports and in the country-wise and region-wise destinations of exports. The third sector looks at the indicators of export competitiveness. Thereafter, the various instruments used for export promotion in Pakistan and elsewhere are identified. This Chapter concludes with a series of recommendations for promoting exports of Pakistan. 16.1. Growth in Exports Econometric analysis has been undertaken of the impact of different factors on growth in the volume of exports from 1990-91 to 2018-19. The findings are presented below. Determinants of the Growth of Exports Due to 1% Change in % Change in Volume of Exports Short-Run Long-Run • Volume of World Trade 0.100 0.552 • Dollar Price Level of Exports 0.434 2.392 • Real Exchange Rate* 0.434 2.392 *Measured as the ratio of the nominal exchange rate to the domestic price level. Clearly, the growth in exports is linked to the growth in world trade. However, on average, 1 percent growth in the volume of world trade, other things being equal, has led to a 0.55 percent growth in the volume of Pakistan’s exports. This implies that Pakistan’s share in world trade which was low has declined further. 153