Global Integration and Trade Diversification - Pakistan’s Position in Global Value Chains
Keywords:
Global Economy, FDI, Textile, Agriculture, CPEC, Pakistan, OECD, Trade Deficit, Value Addition, Energy, Productivity, Technology, Exports, Imports, Skill.Abstract
Pakistan is not an isolated state with respect to the global economy, it actively trades, it is a recipient of foreign direct investment (FDI) and is integrated into world value chains yet at the low value end, most prominently, in the textile and agricultural industry (Asian Development Bank & Islamic Development Bank Institute, 2022; Batool and Taguchi, 2025).
Instead of using its textile base and rich agricultural resource endowment to climb towards higher value added activities, the country remains stuck in a pattern of exporting basic cotton products, rice and a few agriculture based goods, while importing a broad range of sophisticated intermediates and capital goods (Tayyab & Ruhulislam, 2025; Kowalski et al., 2015).
This paper focuses on three interlinked questions: (a) why export led sectors such as textiles and agriculture continue to underperform, (b) how and why FDI has become concentrated in infrastructure and energy, especially under the China Pakistan Economic Corridor (CPEC) and (c) what realistic opportunities exist to diversify exports and reduce the persistent trade deficit.
