Imports aren’t always bad for economy: Research

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KARACHI: A recent research has just rejected the perception that imports have been negatively affecting Pakistan’s economy due to rising Balance of Payment (BOP) deficit and decline in foreign exchange reserves.

According to a research ‘Imports led Growth: The case of Pakistan’ conducted by Dr. Nooreen Mujahid, Assistant Professor Department of Economics, University of Karachi and her two students Aniqa Zeb and Azeema Begum, imports have had positive impact on Pakistan’s economy.

This paradox has been revealed after data of GDP growth rate, imports, CPI, exports and FDI were studied. The data for the study of these economic variables was taken for the period of 1972 to 2016.

“People generally think that imports always have negative impact on the economy. But data and facts have revealed things otherwise. Imports have had positive impact and in fact it has improved Pakistan’s GDP growth,” said Zeb, who presented the research paper at a recently held at ‘Conference on Diversity and Peace: Challenges for Social Discourse’ here at Karachi University.

As per results of the study, the GDP growth rate has been affected positively more by import as compared to export.

According to the research, most of the imports contribute to the economic activities in the country. These imports are generally not only finished goods but also input material for the industry both as raw material and production machinery.

“Import of capital and intermediate goods should be encouraged meanwhile, consumer goods should be discouraged,” the study suggested.

“Border tariff should be removed or at least decreased for those goods which are used in industries especially exportable industry. It will lower the production cost and hence enhance price competitiveness of local goods in local market may also enhance its competitiveness abroad.”

“How can import of petrol, which is almost quarter of our total imports, be considered to have negative effects on economy? It is either used in the industry or for transportation. In both cases it fuels economic activity in the country,” Zeb said.