The competitive advantage of Pakistan : empirical analysis of the textile/apparel industry
There is a general belief that industrialization implies economic growth and development. Unless countries industrialize, they will continue to remain underdeveloped. The progress of countries like South Korea, Taiwan, and other East and South -East Asian countries, called the Newly Industrialized Countries (NICs), only endorses this view. In Pakistan the extraordinary growth in industry in the 1950s and 1960s suggested that Pakistan might be one of the few countries at that time to join the developed world. However the historical perspective reveals that the industrialisation that has taken place in Pakistan, failed to help the economy to expand and grow. Industrial investment in Pakistan remains import-dependent and ignores backward and forward linkages thus restricting opportunities for development and growth. The perverse characteristics of industrialisation in Pakistan have contributed little to the eradication of poverty in the country. Pakistan after five decades of independence still remains one of the poorest countries of the world. This study sets out to analyse Pakistan's industries and their ability to broaden and upgrade their competitive positions to cope with increasing international competition. It suggests a conceptual framework of organisational characteristics influencing the process and formation of clusters. After the general analysis of Pakistan's competitive industries, the research limits itself to Pakistan's textile/apparel industry because of the time constraint. The textile/apparel industry is the dominant export industry in the manufacturing sector of Pakistan. Clusters are a driving force in increasing exports and magnets for attracting foreign investment. The phenomenon of clusters in one form or another has been recognised and explored in a range of literatures. Intellectual antecedents of cluster theory date back at least to Alfred Marshall' who included a fascinating chapter on the externalities of specialised industrial locations in his 'Principles of Economics' (originally published in 1890). During the first 50 years of this century, economic geography was a recognised field with an extensive literature. With the mid century advent of neo classical economics, however, location moved out of the economic midstream. More recently, increasing returns have started to play a central role in new theories of growth and international trade, and interest in the field of economic geography is growing (Porter, 1996, p. 206). Knowledge about cluster theory has advanced and continues to spread since publication of 'The Competitive Advantage of Nations', (1990) by Michael Porter. The cluster concept now represents a new way of thinking about national, state, and city economies, and points to new roles for companies, governments, and other institutions striving to enhance competitiveness.