Introduction

It is now a truism that acceleration in the global movement of capital and goods, termed conventionally 'globalisation', carries immense opportunities but also serious potential threats. Ultimately, it will be the international competitiveness of firms, in particular economies, that will determine how far opportunities are converted into lasting national benefits and how far potential threats from heightened international competition result in serious costs.

However, the activities of firms may be helped or hindered by governments. There is widespread agreement that with important domestic policy changes and with the imminent end of the international textile and clothing quota regime, the economy of Pakistan is at an important crossroads. The competitiveness of the industrial sector in the new, more liberal international and domestic environment will have a critical bearing on economic prospects for the foreseeable future.

This paper aims to place the current situation of industry in the country in an international context by examining trade data over a 20-year period and 'benchmarking' various indicators of national capability and performance against competitor economies. As such it should be seen as a contribution to the debate on international competitiveness in Pakistan and not the result of a detailed assessment of the efficiency of various branches of industry.

We begin with a conceptual discussion of what is meant by international competitiveness, highlighting not only why it is important but also how the nature of international competition has changed in recent years. We then consider aspects of Pakistan's performance in relation to international trade and national capability. We refrain from making detailed policy recommendations but end with some general comments on industrial strategy and competitiveness.

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