For Once, Complexity Drives Success
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A case study of contrasting fortunes: Pakistan & Vietnam
Recent examples of countries that have pulled ahead like Vietnam, Philippines and Thailand clearly illustrate that point when compared to countries that have stuck to the same mode of trade and products for the last several years and decades. An interesting case study in this case is the strategically located country of Pakistan in comparison with Vietnam.
Recently, Atlas of Economic Complexity released comparative rankings of countries measuring the complexity index of the products that they produced and exported. Interestingly countries like Pakistan and Bangladesh (Formerly a part of Pakistan until 1971) have remained stagnated in these rankings with Bangladesh moving from 88th in 1995 to 105th in 2019. Pakistan has fared only slightly better moving from 102nd in 1995 to 93rd in 2019.
In contrast, Vietnam which was ranked 107th in 1995, notably lower than Pakistan and Bangladesh, was ranked at a high of 56th in 2019.
One look at Vietnam’s production and export as opposed to Pakistan would inform you of the crux of the issue. Pakistan’s biggest export at the turn of the century in 2000 was pure cotton yarn at 14% of the export basket. House linen was at 10% while Leather and cotton apparel added another 10–15%. Raw commodities like rice was at 5% approximately as well as other kinds of cotton which clocked in at 1–2%. There is some miniscule production of sports equipment and surgical instruments exports that have remained stagnated in the last 20 years. In 2019, Pakistan’s export had skipped raw cotton altogether, which was a result of heavy subsidies from the government for the sugar growing industry replacing cotton growing substantially. House linens became the biggest individual export at 10% while apparel products of different kinds made up about 1/5th of the exports.
In 2000, a whopping 20% of Vietnam’s exports were crude petroleum. Rubber and rice made up another 6% while footwear was another 10% of the export. In 2019, the same country’s exports were broadcasting electronic equipment, 7% of the export share were telephones, 5.5% of the exports were integrated circuits while less than 5% of the export was was footwear, basically cutting that production by half in less than a generation.
