Lahore School of Economics

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Innovation will help boost textile sector

Highlighting the dire situation faced by one of Pakistan’s key export orientated sector, the Lahore School of Economics conducted a research that concluded that the textile sector requires a continuous flow of technological innovations.

The research suggested the sector needs to constantly engage in product modernism to sustain its market share in global trade.

The textile sector, which aimed to double its exports from $13 billion to $26 billion after the European Union granted generalised scheme of preferences plus status to Pakistan from January 2014, is witnessing a gradual downfall after merely touching export revenue of $13.8 billion in fiscal year 2013-14. Textile exports in fiscal year 2015-16 stood at $12.45 billion.

The textile sector is the largest manufacturing sector in Pakistan, contributing one-fourth to total industrial output, employing 40% of the industrial labour force, and making up 56% of national exports.

However, as compared to the rest of the world, the textile sector in Pakistan has stagnated and its share in world textiles exports has been falling throughout the last decade. Thus, in order to sustain its market share the sector needs a continuous flow of innovation.

The research

A recent analysis of the dynamics of firm level innovation activities conducted by the Lahore School  of Economicsused a sample of 431 Pakistani textile and apparel manufacturers, and found that 56% of the surveyed firms introduced technological and non-technological innovations during this period.

Also, 38% of firms introduced new products through these were incremental in nature since the majority of those products were only new to the firm and not new to the market. There were also six enterprises who introduced products that were first in the world and all six firms were from Sialkot.

The researchers also found that innovation increases with firm size; large firms have an innovation rate of 83%, followed by medium sized firms (68%) and small sized firms (39%).

Technologically innovative firms were found to be spending 10% of their turnover in 2015 on innovation mainly for acquiring newer vintages of capital with the purpose of introducing new and improved products and processes.

Lack of availability of funds within the enterprise was found to be the single most important cost factor hampering innovation. Also, firms were found to be more focused on innovation than promoting growth.

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posted by S A J Shirazi @ 9/29/2016 10:41:00 AM,

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