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While China, Vietnam, Bangladesh, South Korea, and Turkey ran competitive currencies and steadily upgraded what they produced, Pakistan did neither — and then added high energy costs and tax friction on top. The result is three decades of stagnant exports, lost manufacturing employment, and a debt cycle that remittances temporarily paper over but cannot fix.
Pakistan’s export problem is often explained through a familiar list: high energy costs, policy instability, weak infrastructure. These are real. But they are not the root cause.
The deeper problem is structural — and it comes from two forces that have worked together, quietly, for three decades. An uncompetitive real exchange rate. And a failure to move up the value chain.
Individually, each of these can be managed. Together, they create a trap from which no amount of short-term adjustment escapes. That is the twin deficit — and it is why exports have not grown.
