Muneeb ur Rehman

The diminishing growth rate of industries in Pakistan is a matter of concern for the policymakers. “As Pakistan grapples with the challenge of increasing the industrial contribution to the overall GDP, China's clustered model of industrial development offers valuable insights. Pakistan can make its industries competitive by adopting this model,” said Mustafa Haider, Executive Director of Pakistan-China Institute, Lahore. Industrial clusters refer to geographic concentrations of interconnected businesses, suppliers, innovation hubs, and associated institutions in a place. According to the Pakistan Economic Survey, in the fiscal year 2022-23, the industrial sector experienced a decline with a negative growth rate of 2.94%.

The performance of the industrial sector is particularly influenced by the manufacturing sector, which constitutes a significant 65% share. “When compared with the performance of China in the industrial sector, Pakistan significantly lags behind. In November 2023, industries in China exceeding the specified size threshold (with a primary business income surpassing RMB 20 million) witnessed a year-on-year increase in added value by 6.6%. Over the period from January to November 2023, the average year-on-year growth rate stood at 4.3%,” he said.

He said China's success was often attributed to the development of specialised industrial clusters, where regions focused on specific industries or sectors. “Pakistan can identify and prioritise key sectors where it has a competitive advantage and foster the development of specialised clusters around those sectors,” he said. Haider underscored the importance of industrial clusters for export promotion and technological spillover. “Industrial clusters in China play a substantial role in contributing to gross domestic product, employment, exports, and foreign investment.

Additionally, these clusters play a crucial part in the integration of new technologies and the adoption of contemporary management practices within the country.” He said that drawing lessons from China, Pakistan can strengthen collaborations between industries and research institutions to promote research and development activities and technological innovation within its industrial clusters.

Credit: INP-WealthPk