Textile industry is Pakistan ’s
largest industry. It employees nearly 15 million people out of about 49 million
workforce. Its share in GDP of the country is 8.5%. Majority of Pakistan ’s
exports are textile products and are exported to EU or USA .
Pakistan ’s
share in international trade of textile is less than 1%.
Textile industry is a low tech industry. Companies involved
in this sector do not pay much attention to research and development.
As a result of its being low tech., there is a strong
competition among developing countries for the textile markets of the developed
world. This makes these countries vulnerable to any fall in demand in the
developed world. There are strong trends of deteriorating terms of trade against
textile dependent nations. As these countries generally import machinery while
export textile products.
The low ability of textile industry to earn foreign exchange
leads them to have huge volumes of external debts. The instability of their
currencies makes the situation worse by increasing the debt burden of these nations. As a result, balance of
payment difficulties and huge fiscal deficit become a frequent problem for
these nations.
The balance of payment and fiscal deficit problems leads
them to borrow more from external donors. This borrowing hinders the economic
growth of these countries as these loans have to be repaid. These underdeveloped countries have huge workforce
which needs job opportunity. Lack of economic activity creates unrest among
masses. This undermines the democratic process of these countries and military has
to intervene from time to time. This happened in Pakistan ,
turkey, Bangladesh ,
Indonesia etc.
