IT exports in Pakistan have a large number of issues, including the lack of proper documentation as compared to software exports, and the fact that most of the revenue is booked under remittances rather than being taxed, which would impede the growth of the IT industry. Further, a large number of IT companies in Pakistan have foreign offices and are registered abroad. Therefore, bringing the IT sector under the taxation regime will only hamper its growth and the development of the industry. Instead, Pakistan should focus on educating its IT manpower and enhancing the skills in the field, rather than making the country dependent on the export of software and services.
Economic impact of IT exports in Pakistan
IT exports from Pakistan are growing, and this is good news for Pakistan’s economy. However, the high costs of doing business and the complexity of regulation are hampering growth. The bulk of Pakistan’s exports are textiles and clothes, which account for over 90% of its total exports to the EU. This means that trade diversification is essential for Pakistan’s growth. GSP+, the agreement between the EU and Pakistan, encourages trade diversification by allowing 78% of Pakistan’s exports to enter the EU at preferential rates.
IT exports have helped Pakistan improve its trade balance, but there is room for improvement. The country needs to boost private investment and export more goods in order to improve its overall competitiveness. Pakistan is suffering from an ongoing trade imbalance. It is also struggling with a low rate of firm productivity.
IT exports are an essential component of Pakistan’s economy, but the country must do more to attract international investments. Its weak greenback gives investors the opportunity to invest in foreign multinationals. Furthermore, it is expected that Pakistan’s economy will post an inclusive growth rate of five percent this year, which will lead to a successful exit from the International Monetary Fund. The report aims to assist tax authorities in designing effective VAT/GST policies that can take into account the sharing economy.
The World Bank’s Pakistan Development Update is a companion piece to the South Asia Economic Focus, which analyzes the country’s economic growth and policy challenges. This edition is titled, ‘Shifting Gears to Digitization and Services-Led Development’. Overall, the recovery in South Asia is continuing and remains uneven, with most countries still lagging far behind their pre-pandemic trend.
The impact of IT exports on Pakistan’s economy has not been fully studied. Empirical studies on the subject have shown a wide variation among countries. For example, it is difficult to calculate the export value of chemicals in Pakistan. Moreover, a country’s export-gap may have a positive impact on its trade deficit.
The present study also examines the impact of supply-side factors on Pakistan’s export performance. It fills in a gap in previous research by empirically estimating a model that focuses on the impact of different export categories. The model includes a number of different factors, including relative prices, domestic demand pressure, and production capacity.
Impact of IT exports on the environment
The impact of IT exports of Pakistan on the environment is not as drastic as the impact of other sectors. This sector is contributing to the environmental degradation through various factors. These include energy consumption, FDI, and income per capita. FDI and energy consumption are mainly responsible for the short-term increase in pollution. In the long-term, however, environmental degradation has become a serious issue. To counter this problem, policy measures are recommended.
Improving environmental standards is a good starting point, which should be implemented by all countries. In Pakistan, this is especially important as 60% of the country’s exports are to high-income countries. It is believed that such policies will encourage cleaner production. Moreover, these measures will help to reduce pollution.
Environmental pollution is also an issue for Pakistan due to high population growth and high GDP growth rates. Furthermore, unplanned urbanization has an adverse impact on the environment. In urban areas, for example, forest land is converted into housing societies, resulting in increased pollution levels. Unplanned urbanization also leads to deforestation, which affects the quality of the environment.
FDI and technological development also play a role in the development of the environment. The current study uses a conventional environmental Kuznets curve hypothesis to analyze the impact of IT exports on the environment. These two factors are critical to the overall sustainability of Pakistan’s economy. However, they also have an impact on the environment, and the government must strive to maintain sustainable growth levels for the country to protect its natural resources and avoid further degradation.
Foreign direct investment (FDI) is an important driver of economic growth in a country. It helps transfer technology from developed countries to developing countries, but it does not come without environmental costs. In some countries, FDI can increase the size and pollution levels of industries. It can lead to the growth of dirty industries, especially in industries involving coal.
Trade liberalization has many implications for the environment. In addition to increasing trade, it may expose a country to stricter environmental standards, which can encourage a country to use more environmentally friendly technologies and production techniques. Increasing trade can also lead to increased energy consumption and emissions of greenhouse gases.
Freelancers’ contribution to IT exports in Pakistan
Freelancers’ contribution to IT export in Pakistan is estimated to reach $150 million in 2020, according to a report by the Pakistan Software Export Board. This growth has been attributed to a growing number of freelancers and clients. The most popular positions in the freelance market are web development, graphic design, and programming.
According to the World Bank, Pakistan’s IT exports increased by about 26% in the last fiscal year, and they have grown by about 50% in the last four years. Analysts predict that IT exports will grow to $7 billion in two or three years. In fact, according to the State Bank of Pakistan, the value of software exports to the country in FY2020-21 will reach $700 million, an increase of almost 50%.
Impact of declining value of rupee on IT exports in Pakistan
In recent years, the economy of Pakistan has experienced a number of challenges including a sharp depreciation of its currency against the US dollar. As a result, Pakistan’s foreign exchange reserves have been depleted, and the government is battling an overvalued currency.
The depreciation in rupee value has resulted in an increase in imports. This is due to increased economic activity, particularly in CPEC, which demands imports of heavy machinery. Pakistan has a diversified economy driven by investments and consumption. Its exports in FY 2018 were worth US$24.8 billion and imports were worth $56.6 billion. It is imperative that the government and central bank work together to make the economy more competitive.
The decline in rupee value has reduced export volumes in Pakistan’s textile and apparel sectors. While a decrease in the rupee has depressed domestic prices, these exports still contain a large proportion of imported components. While they may be cheaper domestically, they are not interchangeable with goods produced in Pakistan.
In addition to the impact of depreciation on IT exports, the rupee’s depreciation has also increased imports and exports. However, a decline in the rupee’s value will cause inflation, and the government may be forced to raise interest rates to control the situation. This will slow the economy.
A decline in the value of the rupee will affect business costs and make it more expensive to compete in the international market. The depreciation will impact prices, production levels, and employment opportunities. In addition, it will increase the cost of borrowing in dollars. As the rupee’s value depreciates, companies will have to convert more dollars into PKR to make their exports more competitive.
However, depreciation is difficult to achieve, and sudden plunges in the rupee’s value will likely result in panic and compromise gains from depreciation. The impact of depreciation depends on three broad factors: inflation rates in other countries, domestic prices, and overall macroeconomic conditions.
