The English word "economy" can be traced back to the Greek words ??????? one who muddles through a household". An economy represents the financial system of a country, which in turn, is the combination of the labor, capital and land resources, and the economic agents that participate in the production, exchange, distribution, and consumption of goods and services. Pakistan's Economy is the 27th biggest economy in the globe viewed from purchasing powers' perspective and 48th biggest in respect of absolute dollar terms. Pakistan's economy is semi-industrialized which is fundamentally composed of textiles, chemicals, food processing agriculture etc. Growth of Pakistan's economy is based on the pillars of Indus River, diversified economies of Karachi and Punjab's urban centers; which run parallel to the lesser developed areas in remaining parts of the country. Internal political instability/disputes, a fast growing population, mixed levels of foreign investment, and a costly, ongoing confrontation with neighboring India have been the core reasons contributing to the economic decline and decay of the country.

Pakistan has suffered a lot from the problems of rapid population growth, massive budget deficits, and heavy reliance on foreign loans and aid. Over the years Pakistan has been overburdened by sizable foreign debt. The maintenance of a large military establishment has also proved white elephant for the crippled economy. Loans desolation, expenditure on defense, and administrative expenditures tend to consume a large portion of Pakistan's annual budget. The social sector is victim of chronic underdevelopment. As a matter of fact, blind eye is turned to this vital sector of the economy.

Putting a cursory glance at the global picture as a whole, a new and theatrical world order had emerged since the end of the cold war, and is heading to develop into the new century. The W.T.O is at the centre of continuing process toward international trade and industry liberalization. On the other hand, in Europe and North America, the E.U. and N.A.F.T.A. respectively show the growing trend to create regional economies. It is Asia that is attracting world attention as the most dynamic growth region on the surface of the globe today and is likely to drive the world economic development with the passage of time. [1]

Despite the tendency towards re-location, most developed countries have nevertheless succeeded in maintaining a local textile industry which is both viable and competitive at international level. The textile industry in developing countries has increasingly placed emphasis on quality, the rapid response to growing demand and innovation in the areas of fibers and high value-added textiles.

The Textile Industry in U.S.A. invested more than 35.9 Bln. $ during 1980-2000. Though there is criticism on cost of job saved through protective quota regime, there is a tremendous productivity and efficiency gain. The process is continued to make it competitive against the products made in the world, not just in cost but also in quality, brand recognition, price and most especially the service. The influx of quality products at competitive price through imports from Asia especially China, Korea, and Hong Kong are responsible for a further re-structuring other industry and re-sourcing of the supplies.[2]

The Textile Industry, across the globe, is trying to consolidate through re-adjustment strategy. The markets have become very competitive. There is a cut throat competition amongst the low cost producers mostly in Asia to take up the share being lost by high cost European Manufacturers. Pakistan has to compete with countries which are similar in factor conditions and comparative advantages. The close competitors are India, China, Turkey, Indonesia. Due to cotton price edge, the Indian Textile Industry had been able to compete us in our traditional yarn and cloth markets. While the impact of regional blocks especially N.A.F.T.A. has also started impacting in Woven and Knitted Fabrics market. These market changes are mounting pressure on our Textile Industry and the industry is in the process of transition for a structural change to rebuild its competitive viability. Such structural changes are always painful. The industry, in general, is not in a comfortable position. Further the declining profitability has aggravated the credit access problems and ability to finance new investment which is so important for improving quality and productivity. Excepting few cases no attention has been given to skill development both in manufacturing and marketing. Lack of product diversification and passive selling has kept industry to low market segments with earnings on the descending order. [3]

The industry has tremendous potential to perform in excellent manner. To cope with the emerging challenges across in all walks of life, it is imperative that government and industry should have cognizance of the ground facts, particularly textile industry to focus on the quality of products so as to ensure customers satisfaction, prices and provision of after sale service. In this regard, knowledge of markets, workers training and products development and improvement can go a long way to cope with the challenge.

It is a fact that present day international trade is neither free nor fair. There is continued downward trend of prices of textile products. Conversely the prices of raw materials and labor are on the ascending order. No one can deny the fact that Textile Industry of Pakistan is really passing through a very critical stage as a consequence of existing socio-economic and political instability. Pakistan Textile industry is open to tough competition after the phasing out of quota. Moreover, Social Compliance, Environmental & Effluent Treatment Plants, Anti-Dumping, Counter-Veiling and Safeguard Accusations are the other challenges being faced by our Textile Industry.


Is Pakistan textile industry capable of playing a vital role in boosting the national economy through promoting exports and reducing trade deficit in the wake of its existing status?


The hypothesis on which the research study is based are given in the following lines.

    H 1. Pakistan textile industry significantly contributes towards GDP.
    H 2. Lack of advanced technology hampers the progress of textile industry.


The main objectives of the research study are enumerated in the following lines.

  1. To find out the contribution of textile industry in boosting the export volume of the country.

  2. To find out the magnitude of foreign exchange earned by the textile industry.

  3. To find out creation of employment opportunities and the volume of total employment provided by the textile industry.

  4. To find out the magnitude of tax revenue contributed by the textile industry towards the total tax collection of the country.

  5. To identify the specific areas, which needs improvement for further growth of textile industry of Pakistan?


The research study will prove very helpful to spotlight the bottlenecks which impede the growth and progress of textile industry in Pakistan. Further, it will go a long way to exhibit the key contributions made by the textile industry in uplifting the economic growth and development at the national level. This, in turn, will attract further investment in the respective sector leading towards further expansion and growth. The ultimate result of the above scenario will set a cycle of prosperity in operation. Above all, in the prevailing reign of economic downturns across the globe, it will open new venues for combating the scourge of economic backwardness and will help in manifesting the role of textile sector in putting the national economy on strong footings.



    The nature of research is primarily descriptive, analytical and quantitative.


    The sample of the study for collection of secondary data will be confined to Federal Bureau of Statistics. Moreover, the information on the research available in the books, articles, journals, newspapers and internet will also be traversed.


    The population for research study will be confined to officers/officials of textile industry of Pakistan with special reference to Faisalabad cluster and officers/officials from concerned Government Departments.


    Random sampling technique will be followed during the course of this study.


    Primary data for the study will be collected through questionnaire from respondents in the textile industry of Pakistan with special reference to Faisalabad cluster.


    Statistical tools of Time Series Analysis and correlation will be used for analysis of data. The results will be displayed through tables and graphs.


1. Economy: a country defined in terms of the total composition of its economic activities and the ultimate location of economic decision making.

2. Industry: Producing goods and services in an economy is called industry. The term industry also refers to a group of enterprises, that produce a specific type of good or service for example, the lather industry, the textile industry, lumber industry, steel industry. Services sector of industries include airline, railroad, and trucking industries.

3. Textile industry: Textile industry means the industry which is basically related with designing, manufacturing and distribution of clothing.

4. GDP: the total money value of all final goods and services produced in an economy over a one year period.

5. GNP: The total money value of all final goods and services produced in an economy over a one year period net property income from abroad (net profits, dividends, rent and interest).

6. Inflation: Inflation is an economic term which means a general level of price hike of goods and services in an economy within a stipulated period of time. In an inflationary situation, the value of money is eroded, which in turn curtails its purchasing power and give rise to prices of goods and services.

7. Unemployment: The term "Unemployment" means a situation where persons are available and are willing to work but find no opportunity to work. The magnitude of unemployment can be measured in terms of percentage which indicates unemployment rate.

8. Import: The term imports denote the concept of bringing goods and services into the country via sea port or dry port for trading. The person who buys such goods and services is known as importer, whereas exporter is the person based overseas and sells the goods and services to the importer.

9. Export: The term export denotes the concept of shipping goods and services outside the geographical boundaries of the port of a country.

10. Budget: budget is an estimate of revenues and expenditures for a future period usually one year time. It's a forecasted plan for savings and outlays during the coming period say a month or a quarter or a year. A budget conveys a significant concept of microeconomics and explains an organizational plan in terms of money.
Balance of trade: the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports.

11. Balance of payments: accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, and financial capital, as well as financial transfers.

12. Foreign exchange: the conversion of one currency into another, or the buying and selling of different currencies


Keeping in view the financial and resource constraints, the researcher intends to confine this study project to Faisalabad cluster to ensure collection of authentic data for this research.


The tentative research outline is given in the following lines.

Chapter 1             Introduction

Chapter 2             Literature Review

Chapter 3             Research methodology

Chapter 4             Data Analysis

Chapter 5             Findings and recommendations


[2] Ibid.

[3] Ibid.

Source: ChinaStones -

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