The phenomenon of globalization, therefore, needs to beevaluated on the basis of the major social and economic impacts of expandinginternational trade and market access.

Globalization and one of its premium ingredients i.e. FreeTrade has inter alia proved incremental in raising per capita income as per thepredictions of the international trade theorists. Countries with open tradepolicies also have superior labour rights, and labour rights improve over timein countries that adopt open trade policies thereby signaling general raise inthe purchasing power of the people. In the short run, trade clearly enhancesthe working conditions of workers in export industries and  those working in export processing zones, butthreatens the conditions of workers whose companies compete with imports. Theevidence shows that with the passage of time, all workers benefit by moving intomore productive employment settings. By the same token the trade sanctions arelikely to check per capita income.

At the international level many regional trade blocs andcustom unions have come to fore for keeping pace with the trends ofglobalization. At a time when the regional economic blocs such as EU, ASEAN,NAFTA, EFTA, OAU etc have started making their mark on international trade theworld over, Pakistani businessmen in particular and the South Asian businesstrends show an abysmally low intra-regional trade. The need of the hour is toexplore opportunities in the region so that to spread the fruits ofinternational prosperity toSouth Asia that ishome to 21% of the world’s total population.

Although economic integration is the order of the day; a fewof the well known instances have already been mentioned yet it seems that themost of these unions are geographical in nature; they encompass a specificcircumference of the globe. The member states are xenophobic in so far theaccession of the extra regional of members is concerned. They are reluctant toshare the fruits of their economic success with the other races. The EuropeanUnion with a common currency and a completely barrierless trade within theorganization has become one of the models for the rest of the world to emulate.

The case ofTurkeyis well in hand. Despite fulfilling the qualification of geographicalcontiguity, it is not being welcomed in the EU. Again these organizations arepolitical in nature. With the passage of time, the EU is fast becoming apolitical entity though the other mentioned organizations have yet to travel along way for that. To cut it short, the ultimate aim is political though theimmediate aim may be economic.

In case of the third world countries, making a mark andreputation in the international market in the presence of sound economic actorsis not an easy task. As mentioned earlier the EU and other regional blocksafford myriad of opportunities to the member countries in producing cheaper butcompetitive products to the chagrin of the third world businessmen and traders.This cut-throat competition coupled with the higher cost of production andhence higher prices and poorer standard/quality almost put the third worldcountries in a catch-22 type of situation.

The products of the People’s Republic ofChina are sold almost everywhere, not only inthe developing world where the people cannot afford to buy the expensiveproducts, but also inEurope and the AmericanContinent where consumers never compromise on the quality of the products. InPakistan,many local and non-local investors have almost winded up their industries owingto this grim situation. Question arises here is that if china can manufactureproducts and offer them to the consumers on the affordable prices then why notPakistan?Answer to the quiz lies in the fact that the Chinese Government has providedmany incentives, subsidies and other facilities to their entrepreneurs likefree power provision, tax exemptions, zero rent for buildings and production/manufacturing plants. Government fully supports them. InPakistan even after paying largebills and taxes, both open as well as hidden, the industrialists are subjectedto long hours of load-shedding.

It is really deplorable that we have not been able to getleverage out of our geographical location.Pakistanhas close political and economic relations with the Middle East, Central andSouth Asia. It is the main gateway toCentralAsia and supplier to the Gulf and the Emirates. Economicintegration in South Asia has been less attractive in the past due to thestrained relations betweenPakistanandIndia on the issue ofJammu and Kashmir.However, notable steps have been taken by the South Asian Association forRegional Cooperation (SAARC) towards greater economic integration and toestablish South Asian Free Trade Area (SAFTA) of whichPakistan is a member. Yet much isneeded to be done on this front. Ironically thoughSouthAsia is home to 21% of the world population yet they account for2% of the world GNP, and share only 1.3% in the total exports, 1% of global FDIinflows and 1% of global tourism receipts. It is really a grim situation.

Pakistan's economy is still very primitiveand is dependent on agriculture. The sector contributes 25% to GNP but employsnearly 50% of the labour force. Industry contributes approximately 18% to GNPand services about 50%, of which wholesale and retail trade account for 15%,and transport and communication for 10%. As a result of the importance of theagricultural sector, climatic conditions and water resources have a significantimpact on the yearly economic performance. Over the period 2000 to 2003, GNPgrowth has increased from an average of 3% per annum to nearly 5% in fiscalyear 2003.

The industry is concentrated in theKarachiarea, as well as in Punjab, aroundLahore,Sialkot andFaisalabad.Other cities such as Quetta, Multan, Hyderabad or Peshawar also present someindustrial activity but cannot compete with the former as far as the quality ofthe business environment is concerned The size of the domestic market has beenincreasing at a high rate based on a growing middle class, presently estimatedat 7 million, with a Purchasing Power Parity of USD 7000. The volume of foreigntrade has been increasing since 1999; in 2003, total import value was USD 12billion, approximately 1 billion higher than total exports.

Imports are dominated by petroleum and derivatives as wellas machinery and equipment. The largest export sector ofPakistan is the textile and apparelsector with nearly 70% of the total exports, the balance is made up of cereals(mainly rice), miscellaneous manufactured goods (mainly toys and sports goods),chemicals, food and fish products and scientific instruments.

The European Union is the single largest trading partner ofPakistan and during fiscal year 2003, the shareof Pakistani exports to the EU markets was in excess of 30% ofPakistan'stotal exports. The exports to the EU market this year grew by more than 22%over the previous year.Pakistanenjoys a reasonable trade surplus with the EU. Growth in exports to the EU wasprimarily due to the enhancement of 15% in the textile quota and therefore, anincreased market access for Pakistani exports from January 2002.

Chances for a substantial growth of intra-regional trade arehigh. In January 2004, the South Asia Free Trade Agreement has been signed,with the Free Trade Area expected to become effective in 2006. In a similarvein, bilateral trade betweenPakistanandIndiais expected to gain momentum after tariff cuts were agreed on at the end of2003.

Pakistan has edge in producing a fewproducts though even there it has to compete with a number of competitors inthis regard.

In the textile and garment sectorPakistan has a definite competitiveadvantage, further enhanced by the disappearance of the Multi- Fibre Agreementby the end of 2004. Despite its successes and its recent spate of investment instate of the art machinery, the industry still needs know-how and processes toimprove the quality of its products, as well as design, fashion and marketingdevelopment.

This sector has been divided into the different stages ofproduction, such as spinning, weaving, knitting and finishing, dyeing, etc.while the major groups usually cover all stages of the product cycle. Mostproducts are cotton based with emphasis on the first stages of production likeyarn, cloth and fabrics. Only recently has the country entered into the moreadded value production of garments. The particular emphasis on bed linen andtowels is worth noting, given that it is the subject of an anti dumping reviewby the European Union.

Based on the competitive advantages of this sector inPakistan,and the liberalizing of international trade after the end of the Multi-Fibre Agreementby the end of 2004, the opportunities for a mutually beneficial co-operationbetween Pakistani business groups and European investors would further bewidened.

Opportunities in the food processing and packaging industry(especially dairy products, fruits and vegetables, fish and sea food), based ona very large agricultural sector and a large and expanding fishing fleet, areprimarily related to upgrading of the underdeveloped collecting, processing,packaging and distribution system.

Obvious export markets are the Middle East, South andCentral Asia as well as Europe and theUSA if the present photo-sanitaryconstraints can be resolved. The local emerging middle class should alsoprovide an outlet for well processed and packaged food in the medium term. Theimpression from the authors is that investment in this sector should definitelybe long-term, in view of the necessity to organize the supply chain as well asthe distribution network in a rather primitive environment, be it in the fruit,vegetable, dairy or fishing sectors. Also, a major part of the sector dependson the packaging industry, including carton boxes, tin can, or freezingprocesses, which are still underdeveloped.

The light engineering and automotive parts industry shouldalso provide opportunities, as far as they are backed up by export markets.Based on an infant automobile industry still protected by high tariffs anddominated by Japanese assemblers, the existing automotive supply industry is indire need of technology improvements. Similarly, there is a great demand formachinery and equipment linked to the textile and garment sector, such asindustrial dryers, cooling fans, spinning needles, etc.

Last but not least, the electrical and engineering sectorlinked to power generation and transmission is expected to face a strong andgrowing demand in coming years. However, this sector has been targeted only asa third priority sector mostly based on the competition which is alreadypresent from technology sourced from other Asian countries, such as Japan,Korea, Taiwan and more importantly China, which appears to be a main tradingpartner for Pakistan as well as a potential investor in this sector. In thisregard,Bangladeshand some African nations can be a good market for Pakistani products.

In this regard, surgical sector should also be furtherdeveloped. This sector exports 95% of its production, mostly to theUSAand the EU. It represents a turnover of about USD 150 million per annum andconsists mostly of metal instruments. This industry is concentrated inSialkot making it one ofthe significant clusters for such production worldwide. The technique is mostlybased on forging and metal finishing for which cooperation with European firmwith the proper know how might be required.

Marble is used extensively by the domestic constructionindustry, and part of the production is exported, mostly to theMiddle East. Mining and production sites are spread moreor less over the North and East of the country. The production represents aboutUSD 25 million per annum. The main drawback of this industry is the absence ofsophisticated techniques: mining through explosives which do not allow theproduction of large slabs of marble and implies important wastage.

The industry is definitely interested in acquiring know-how,as well as the proper slicing equipment to improve the quality of its products.The main drawback for a foreign investor would be to find the right partner inan industry which is made up of a number of small enterprises.

This sector, based on vast resources of rough semi preciousstones is still in the infant stages. The official export of rough stonesrepresents about USD 5 million per annum, while no stones are cut locally yet.The government is trying to develop a stone cutting industry and has createdthree training institutes.

It may be surprising that this sector has so far not beendeveloped inPakistan,especially when compared to its large neighbourIndia. At present there is no suchindustry inPakistan,despite the opening of a few call centres by financial institutions or someoverseas Pakistanis from theUSA.Also, some incubators have projects in the animated video games sector.However, the government has recently launched initiatives to promote theindustry, through the development of IT education and training.

All said and done, it is to be concluded that Pakistanieconomy has really to take off, and for that all the hiccups in the way ofindustrialization and investment are to be removed. Not only step are to betaken to make Pakistan more attractive destination to the foreign investors,but also providing the much needed subsidies and incentives to the localinvestors and the industrialists to enable them to survive nay compete in the‘Brave New World’