Pakistan's Cotton and Textile Economy: Intersectoral Linkages and Effects on Rural and Urban Poverty

Pakistan's cotton, textile, and apparel industries are key sectors of the nation's economy; their performance can contribute to either a rise or fall in poverty. These vital industries have faced a variety of challenges and opportunities in recent years, including world cotton price instability, liberalization of the multilateral clothing and textile trade, and sharp swings in the Pakistani macroeconomic situation. Using a computable general equilibrium (CGE) model and drawing on a national survey of Pakistani households, the authors of this report evaluate the consequences of several recent or prospective economic changes on Pakistan's cotton, textile, and apparel industries and poverty levels. The economic changes include an increased inflow of foreign capital, higher world cotton and textile prices, government subsidization of the textile industry, increased productivity in the cotton and textile sectors, and other possible developments. By presenting these scenarios, the report offers policymakers and analysts a guide to anticipating and shaping the future of economic growth and poverty reduction in Pakistan.