More than 90 per cent of Pakistan’s GDP is essentially consumption, which is largely import financed, making any growth solely dependent on the availability of foreign exchange. It is impossible for the country to achieve any reasonable growth with this economic model, and the only way out is pivoting towards greater investments in the economy, which are largely concentrated towards export-oriented industries. Even the export problem is no longer about “more textiles” or a generic push towards industrialisation, with a headless chicken strategy being a better fit for a policy than an industrial policy. It is now about where we industrialise and what kind of export model we ought to be building. The future is different from the past, and therefore making the same mistakes that were made in the past will also result in surprisingly similar outcomes. Pakistan sits close to the bottom of Global Value Chain (GVC) integration. Any serious effort to actually grow or increase incomes would require moving up the GVC, which implies using more imports for generating even greater exports. Our export base remains heavily tilted toward traditional sectors with relatively lower imported intermediate content and weaker participation in complex cross-border production networks. This inadvertently shows up in the broad trade-in-value-added view, where Pakistan’s foreign value-added share of exports appears far below manufacturing GVC hubs like Vietnam and Malaysia. A South-first, export-oriented industrial strategy is an economically efficient way forward — ignoring it would result in more years of flat-to-no export growth The future of competitive exports is inherently import-intensive, and as an economy upgrades beyond basic commodities or traditional manufacturing, it starts importing more components, machinery, specialised chemicals, precision inputs, etc. The value-addition that leads to export happens during assembly, processing, design-to-manufacture, etc. Vietnam did not become a manufacturing magnet because it avoided imports. It became one because it moved imports cheaply, assembled fast, exported efficiently, and then gradually localised upstream segments. Essentially, the uncomfortable truth remains that any successful export upgrade would require even greater imported content. You cannot export more without importing more. The same story has been repeated time and again throughout non-resource-based, export-oriented economies, and the same pattern holds across successful Asian exporters. Pakistan’s industrial gravity historically lives in the centre of the country, around inherited ecosystems, labour pools, and domestic market proximity. It made sense in an earlier phase of development. If we want to diversify into higher-value, more import-reliant segments, locating export-oriented industry far from the coast imposes a silent tax. Distance to ports is not a one-time cost in a GVC model; it is a two-legged cost wherein imports must move inland to the factory, while exports must move back to the port. This is a “double logistics penalty” that shows up brutally in the margins. Pakistan’s logistics burden is high relative to emerging market standards, and our freight system is heavily road-dominated (and thereby more expensive). It is even more expensive when you base import-dependent export growth more than a thousand kilometres away from the main seaports. The “double logistics penalty” would eat up margins for exporters in the range of 2pc to 5pc — which becomes sizeable when compared to other markets. Export competitiveness requires the seller to be ruthlessly efficient and fast, and having a structural logistics penalty only makes it worse. The issue compounds once the import content in exports increases more as we move up the GVC. Being close to the port means being close to actual customers while saving the precious 2-5pc spread, which can be the differential between a successful export order and an export order that got away. Another benefit that the South belt (more specifically, Karachi) provides, which we refuse to capitalise on for literally no logical reason, is the availability of surplus power at a marginal cost in the range of Rs15 per kWh. There is close to 4,000 MW of surplus baseload power capacity available in the South (Hub, Port Qasim, and Jamshoro) that is barely being utilised (less than 30pc dispatch) because of the grossly inefficient and inequitable economics of the uniform power price. The coal-fired power plants available in the South, literally next to the Arabian Sea, can generate power at a marginal cost of Rs15 per kWh. Any coherent and economically sound industrial policy would want to maximise the benefits available from the low-cost unused power. The capacity costs of it are already being paid — selling incremental power at marginal cost would lead to higher power generation, which would actually reduce capacity costs for everyone. More importantly, availability of power at marginal cost would unlock industrial activity and economic growth, eventually leading to more jobs and higher exports. There is no case against providing incremental power at marginal cost for industrial growth, other than a myopically political and economically irrational one. A lower cost of power and lower logistics costs make our export base more competitive and enable the country to grow upwards on the GVC. Such a structure improves export margins by 7-9pc, while having positive externalities for people across the country. A South-first, export-oriented industrial strategy, that focuses on areas that are closer to the port and power-generation capacity, is an economically efficient way forward. Ignoring it would well result in more years of flat-to-no export growth. If Pakistan wants to move into assembly-heavy, import-intensive export segments, then the default location for new capacity should be the coastal areas, closer to the port, whether that is Thatta, Nooriabad, Karachi, Port Qasim, etc. With a lower marginal cost of power as an anchor, the South belt can also host power-intensive industries and high-load-factor manufacturing that needs cost certainty, and new industrial ecosystems that can scale without tariff volatility, among others. This provides the core industrial base, without which any export-oriented growth will remain a pipe dream. The export-oriented future that can actually generate jobs for the people and increase incomes for all will not happen spontaneously through slogans or speeches. It can be unlocked through carefully calibrated structural arithmetic that prioritises a coastal, power-competitive, logistics-first industrial spine. The writer is an assistant professor of practice at IBA, member of the Thar Coal Energy Board, and CEO of NCGCL. Published in Dawn, The Business and Finance Weekly, December 15th, 2025