With around 220 million people and a strategic location at the crossroads of South, Central, and West Asia, Pakistan has the potential to become a regional economic hub. However, much needs to be done to foster the economic stability and sustained growth that Pakistan needs to realize this potential.
One way to get there is by developing economic corridors — defined geographic areas with modern transport and trade infrastructure, facilities, and policies that will spur economic activity within the country and with its neighbors. Economic corridors involve infrastructure, industrial, and urban developments. Done well, these can be fertile ground for investments and opportunities that will result in more economic activity, jobs and faster movement of people and goods.
An Asian Development Bank publication examined the potential of economic corridor development to support Pakistan’s sustainable growth. It found that structural reforms in key areas, including rationalizing regulations and taxes for businesses and improving trade facilitation and logistics, are crucial to unleashing the country’s economic growth.
With progress in these areas, coupled with more investments in people, improved labor markets and financial inclusion, the study suggests some targeted interventions that can help to build out its economic corridors – this article explores three of them.
1. Infrastructure development
Good infrastructure is the backbone of economic corridor development. Efficient multimodal transport networks, including roads, railways, and ports, link urban centers to domestic and international markets, encourage travel, and enhance trade.
Pakistan can maximize its strategic location through connectivity and economic integration with other member countries of the Central Asia Regional Economic Cooperation (CAREC) Program, which can help to harmonize standards within the region to increase cross-border trade.
|The CAREC Program is a partnership for countries in Central Asia and beyond, to promote sustainable development through regional cooperation. One of its priorities is economic corridor development, and it has supported a significant number of projects to enhance infrastructure connectivity between its member countries including Pakistan.|
It is also crucial to simplify customs and border crossing procedures by establishing a national single window among other measures. Pakistan is already developing this system, which will connect all stakeholders and enable document processing through a single digital platform.
2. Industrial development
A key element of economic corridors is the clustering of industries in strategic areas. To thrive, industry needs more than mere proximity to roads or railways – it also needs an investment-friendly environment and a skilled workforce.
The government can incentivize such growth through tax incentives or other mechanisms. And it is critical that whatever is created inside an economic corridor can move beyond it—not only to the rest of Pakistan but to the world, linking the country’s outputs to the global supply chain.
3. Urban development
When properly planned, developed, and managed, cities can be important sources of labor, goods, and innovation. This is why urban development is vital to the success of economic corridors.
Pakistan should aim to improve the livability of its cities and provide access to quality public services such as affordable housing, reliable water supply and other public services. Green public spaces must be developed, and the education system strengthened to enhance the labor market.
|Pakistan is well positioned to become a bigger player in international trade if it increases and diversifies its exports to include higher-value products that are growing in global demand. These include:|
|1. Ready-made garments — Clothing exports are already high, but the country needs to adapt to changing global trends and upgrade technologies to address production bottlenecks.|
|2. Sporting goods — Significant investments in technology, compliance certifications, engineering innovations, and sustainable joint ventures are needed to secure viable contracts with international brands to grow its sporting goods sector.|
|3. Surgical, cutlery and hunting knives — Addressing the labor shortage in this cluster through skills development and training is crucial. The industry also needs to invest in research and development to diversify into more sophisticated products.|
This will not only create jobs and livelihood opportunities, but will also greatly improve people’s health and well-being.
Economic corridor development does not fall on the government’s shoulders alone. The private sector also has a crucial role to play, and this can be encouraged through structural reforms. Capitalizing on its membership in the CAREC Program, Pakistan can work with development partners and other countries in the region to gain the technical and financial support needed to help the country realize its tremendous economic potential.