CREB - Center for Research in Economics and Business

Measuring Innovation in the Textiles Sector of Pakistan

Project members:
Waqar Wadho, Lahore School of Economics
Azam Chaudhry, Lahore School of Economics

The project was developed under the firm capabilities program of the International Growth Centre (IGC) and looked at the innovation activities, innovation rate; its types and level in the Pakistani textile sector.

Textiles is the major manufacturing sector of Pakistan contributing one-fourth of industrial value added, employing 40 percent of industrial labour force, and most importantly it has on average 56 percent share in national exports. Since, it is competing in global market; a continuous flow of innovation is required to at least maintain its share in the World trade. This competitive pressure requires innovation of new products, new processes, new organizational structures and novel marketing techniques to survive and to strive in the global arena. In Pakistan, two particular characteristics of textiles, scope and production chain posit both opportunities and challenges for this sector to be more innovative and competitive. Firstly scope; even though textiles share is 56 percent in national exports, its share is less than 2 percent (1.8 in 2014) in the World trade. There is a greater scope of increasing its world share through innovation and competitiveness and particularly given an increasing trend in wages in China, the leading textile exporting country, coupled with the recent GPS plus status granted by Europe, openings are more likely for the competitive textile firms. Secondly, textiles have the longest production chain, with inherent potential for value addition at each stage of processing, from cotton to ginning, spinning, fabric, processing, made-ups and garments.

In this project, they studied innovation activities of firms in the textiles sector of Pakistan during 2013- 2015. The survey was conducted in August-September 2015 across a sample of 614 textile firms in Punjab and Sindh. The survey will measure both the technological (product and process) and the non-technological (organizational and marketing) aspects of innovation. It will also enable them to determine how factors like size, location, type and export destination impact firm level innovation in the Pakistan textile sector.

View IGC project page

Innovation in the Textiles Sector: A Firm-Level Analysis of Technological and Non-technological Innovation (2016) The Lahore Journal of Economics. 21-Special edition, pp129-166