2. Cotton textile Industry of Pakistan

5. Introduction
Gross Domestic production
Cotton textile
exports
Review of Literature
Methodology & results
References
Introduction
 GROSS DOMESTIC Product
PRODUCT COTTON TEXTILE
 EXPORTS
REVIEW OF LITRATURE
ABSTRUCT
METHODOLOGY
RESULTS

6. Contents
Abstract
Introduction
Literature review
Objectives
Methodology
Recommendations
Conclusion
References

7. “cotton is an economic asset of Pakistan, it is a natural fiber used
primarily as a raw material in textile industry. cotton is a unicellular,
natural fiber composed of almost pure cellulose. As taken from
plants, the fiber is found in lengths of 3/8 to 2 inches’’.

8.  ''the textile industry is one of the most important sectors of
Pakistani. It contributes significantly to the country's 8.5% GDP,
exports as well employment. it is, in fact, the backbone of the
Pakistani economy''.

9. Textile industry plays a vital role in the economic
affairs of Pakistan by providing at both micro and
macro level. The cotton textile industry is being the
backbone of the Pakistan’s economy.
Now Pakistan’s economy is participating
significantly in the export sector more than before
which is very beneficial for economic growth.

10. Conti….
The purpose of this research is to estimate the role
of textile in the economic growth by using time series
data for the period of 1975 to 2011.
This data examined by using an econometric model
with the help of eviews software. ARDL technique is
used to check long run relation and ECM is used to
find out short run relationship among variables

11. The Textile industry is often
considered the backbone of the
Pakistan's economy.
Pakistan's textile industry is the fourth largest cotton producer.
6th largest importer of raw cotton the third largest consumer.

12. The half of the country’s manufacturing foundation is made up by a
cotton- process and textile industries.
Conti….
The T&C (textile and cotton) industry is the oldest, biggest and most universal
industry in the world. It is the classic ‘starter’ industry for export-orientated
industrialized countries and is labor-oriented.
There are 75 cotton producing countries in the world but the top five countries
(China, 6324, 5770 MT, USA, 5062, 5201 MT, India, 4121, 4148 MT Pakistan
2482, 2089 in 2004-05 and 2005-06 respectively) produce more than 70 percent
of the total cotton.

13. Value chain of textile industry
RAW
MATERIAL
APPAREL
PLANTS
DISTRIB.
CENTRES
TEXTILE PLANTS
SPINING
WEAWING
DYING
PRINTING
ASSESSORIES
RETAIL STORES
COSSTOMERS

14. 12%
20%
3%
28%
29%
8%
Sales
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
1st Qtr 12% Pakistan: 2nd Qtr 20% India: 3rd Qtr 3% Others: 4th Qtr 28%
China: 5th 29% USA: 6th 8% Uzbekistan: Source: SMEDA

15. Textile industry is the foundation of Pakistan’s export trade so lies at the heart
of its economy. It helps the country to raise foreign exchange reserves by
making significant contributions in exports.
Production of cotton generally depends on yield per hectare and region
allocated for this crop. Theoretically, this study assumes that the cotton growers
follow a two-step decision making process.
The first step is that they decide which crop to be planted and how much land
to be allocated for each crop. In the second step the grower decides about the
levels of inputs for each crop. Two separate models for yield response and land
were analyzed to assess the production of cotton.
Conti….

16. -1000
0
1000
2000
3000
4000
5000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
gdp
ct
ex
COTTON
TEXTILE
COTTON
TEXTILE

17. (Beenish et al., 2013) describe the
contrast of pre-crisis time (2005 to 2006) and post crisis time (2007 -2010)
Cotton textile plays an important function in the progress and industrialization
course of countries and their combination in the world market
Malik (2000) experienced the developing country assumption for demand for
textile and clothing exports of Pakistan by co-integration regression procedure.
Annual data for the period 1973-1996 was used.
Imran (2011) explained that the effect of universal economic disaster on the
cotton textile industry of Pakistan. For that target he used 141 factories in
Faisalabad, Pakistan.

18. To investigate the role of textile industry in the
development of Pakistan
Policy Recommendation

19. The Data has been collected from secondary
sources.
The study is used to investigate the role of textile industry in the development
of Pakistan from 1975 to 2011.
The main objective of this paper is to investigate the role of textile industry in
the development of Pakistan.
The dependent variable is GDP the cotton textile is independent variable
and the control variable is export in the models. Quantitative data examined by
using Econometric models with the help of Eviews software.

20.  I have used data on crime and education of primary, secondary and
high school during the period of 1973 -2010 to investigate the impact
of crimes on education in Pakistan. The data used for the study is
collected from the World Bank Indicator (WDI) and the economic
survey of Pakistan 2014.

21. Variable verification
GDP (Gross Domestic Product)

22. COTTON TEXTILE
The economy of Pakistan is highly dependent on its cotton and textile sectors,
which face significant challenges and opportunities in an environment of
fluctuating world prices, macroeconomic instability, and changes in the global
trade regime for textiles and apparel. Yet there is limited systematic analysis
available that can help us understand the linkages between these sectors and
the effects of their performance on the country’s economy

23. Exports play a pivotal role in economic affairs of Pakistan by providing benefits
at both macro and micro economic level. The textile industry being the backbone
of the Pakistan’s economy is participating significantly in the export sector of
Pakistan.
EXPORTS

24. Econometrics Model
The unit root test is used to test stationary of variables. A quality of a
statistical model of a time series whose autoregressive limitation is” one”
called as unit root. Unit root is used to check the stationary of time series
data.
 In unit root test, use ADF test and DF generalized least square method.

25. Methodological frameworks
GDP=βo+β1CT+ β2EX+µt
Whereas:
GDP=gross development production
CT=cotton textile
Ex=export
µt= error term
Hypothesis
H0: β1= 0 CT did affect the GDP.
H1: β1 ≠0 CT did not affect the GDP
H0: β2= 0 EXP did affect the GDP.
H1: β2 ≠0 EXP did not affect the GDP.

26. VARIABLES RESULTS OF AUGMENTED DICKEY
FULLER
STATIONARITY
GDP -9.534917
1% -4.252879
5% -3.548490
10% -3.207094
At level
CT -7.984084
1% -4.243644
5% -3.544284
10% -3.204699
At 1st
difference
EX -6.251025
1% -4.243644
5% -3.544284
10% -3.204699
At level

27. Long Run Equation
Short Run Equation
0
1 1
.
k k
it i i t i t
i i
GDP CT EX    
 
     
1
1 1
...
m m
t i t i i t i t t
i i
GDP CT EX ECM    
 
       
ARDL Model

28. Lagrange Multiplier
Statistic
CHSQ (3) 10.8864
Likelihood Ratio
Statistic
CHSQ (3) 13.1219
F Statistic F (3, 26) 4.0819
Table 2 Variable Addition Test (OLS case)
The above results of the variable addition test verified
that their exit long run relationship between GDP and
Cotton textile. F-statistic shows no co-integration because of
rejection of null hypothesis.

29. Regressor Coefficient Standard Error T-Ratio Prob
CT .065838 .029792 2.2099 .035
EX .0014397 .0010056 2.4317 .003
C 2.1537 .45389 4.7449 .000
Table 3 Autoregressive Distributed Lag selection
ARDL (1, 1, 2) selected based on Akaike Information Criterion
The Dependent variable is GDP
35 observations used for estimation from 1977 to 2011

30. There is a positive relationship between the GDP and cotton textile
means that because of the increase in the cotton textile the GDP of the
country increase. The results show that one unit change in GDP leads
to increase the .065838 units in the CT and .0014397 units in EX are
statistically significant.
Calculated value > table value
We reject the null hypothesis and accept the
alternative and results are significant

31. Error Correction Representation for the Selected
ARDL Model
Regressor Coefficient Standard
Error
T-Ratio Prob
dCT -.9208E-4 .011211 -.0082141 .994
dEX -.3747E-4 .4074E-3 -.091993 .927
dEX1 .6502E-3 .3803E-3 1.7096 .098
dC 1.5085 .48677 3.0990 .004
ecm(-1) -.70043 .14395 -4.8657 .000
ARDL (1, 1, 2) selected based on Akaike Information Criterion
Dependent variable is dGDP
35 observations used for estimation from 1977 to 2011

32.  Once identifying the reality of the long - run relationship between GDP and
cotton textile; therefore in command to set up the short-run dynamics we used
the Error-Correction Model (ECM).
Table, elaborates the ECM model results that verify the reality of a short-run
relationship between GDP and cotton textile in Pakistan. Error correction model
(ECM) what shows the speediness of convergence which is close to concerning
.70043.
The value of the ECM shows that 70 % (per cent) convergence get position in
one year.

33. Table, elaborates the Error correction model results that verify the reality of a
short-run relationship between GDP and cotton textile. The negative value of the
Error correction model (ECM) .value shows the speediness of .70043
convergence, and divergence shows positive value mean the economy has left
away from the learning begin point.
R-Squared .67547 R-Bar-Squared .60593
S.E. of
Regression
1.5357 F-stat. F ( 4, 30) 14.5696
Mean of
dependent
variable
-.024000 S.D of
Dependent
Variable
2.4464
Residual Sum of
Squares -
66.0364 Equation Log-
likelihood
-60.7729
Akaike Info.
Criterion
-67.7729 Schwarz
Bayesian
Criterion
-73.2166
DW-statistic 1.8314

34. Pakistan must enter high quality textile market
improve quality standards
move into production of synthetic fiber
invest in R&D of different types of cotton, especially long
staple superior variety
Technology up- gradation &capacity building
interest rate should be low down in order to survive this industry

35. there is a positive relation between the cotton
textile, GDP and exports.
COTTON TEXTILEGDP EXPORTS

36. we conclude that there is a positive relation between the cotton textile
and GDP. It means when textile sector grow, then our economy will be
increased.
According to observed results cotton textile variable has a major effect
on GDP.
The textile industry of Pakistan plays an important role in earning
foreign exchange, providing employment to the country. Pakistan’s
textile industry is going through one of the toughest periods in decades
Our textile sector needs to capitalize on the new emerging
opportunities by technologies, better supply chain management while
trying to reach global value chains.

37. References
 Ali, M. (2000). Export Behaviors of Small and Medium
Enterprises. Thesis submitted to the Department of
Business Administration in Ph.D. Bahauddin Zakariya
University, Multan.
 Altaf Zafar, (2007): Challenges in the Pakistan
Cotton, Yarn, Textile a Apparel Sectors, Chapter Five:
Studies of the Cotton-Textile – Apparel Industry Pakistan
and India: Cotton Trade Policy and Poverty Study.
 Beenish, S.E, N.N. (2013). The impact of energy crisis on the
textile sector of Pakistan (2005-2010). Journal of emerging
issues in Economics, Finance and Banking vol.1 No.5
May, 2013.

38.  Brenton, P and Hoppe, M. (2007) Clothing and Export
Diversification: still a route to growth for Low income
countries? World Bank Policy Research Working Paper
4343
 Gereffi, G. (2002) Outsourcing and Changing Patterns of
International Competition in the Apparel Commodity
Chain, Paper presented at the conference on Responding to
Globalization: Societies, Groups, and Individuals, Hotel
Boulderado, Boulder, Colorado, April 4-7, 2002.
http://www.colorado.edu/IBS/PEC/gadconf/papers/gereffi.pdf

39. Gillham. (1995), (Chapter 7), COTTON PRODUCTION– A TIME
SERIES APPROACH
Imran A. (2011). Impact of financial crisis on textile industry of
Pakistan: Evidence from Nguyen TH, Sutherl and K and
Thoburn J (2003). Globalisation and the Impact of
Restructuring in the Textiles Sector on Households in
Vietnam. Paper (revised) presented at the workshop on
Globalisation and Poverty in Vietnam, organized by the
Department for International Development (DFID) of the
United Kingdom in Hanoi, September 2002. ISSN 2229-
5518 Kiran Jameel1 Corresponding

40. o Jameel, A, A and H. (2014) International Journal of Scientific
& Engineering Research, Volume 5, Issue 8, August-
2014 822
 Jodie, K. & D. (2008) Willem te Velde Investment and Growth
Programme
 Khan, A.H. (1994).The Impact of the Uruguay Round on
World Economy. The Pakistan Development
Review, 33(4), pp.1191-1203, Islamabad
 Nordas, H. (2004) The Global Textile and Clothing Industry
post the Agreement on Textiles and Clothing
http://www.wto.org/english/res_e/booksp_e/discussion_papers5_
e.pdf Overseas Development Institute Pakistan Board of
Investment (2006).Textile Sector Overview Available at
www.pakboi.gov.pk/pdf/Textile.pdf.

41. o Salam. (2007), (Chapter Three), Studies of the Cotton-
Textile – Apparel Industries in Pakistan and India:
Cotton Trade Policy and Poverty Study. EW-
P091261- ESW-TF055329
o Walayat S., U. & K.K. (2012). Challenges faced by textile
industry in Pakistan: Suggested
Solutions. KASBIT Business Journal.
o Khaliji, B.A, B.A., Jaffari, S.I.A., & Mehtab, M. (2013)
Role of Textile Sector in Domestics
Resources Development. 2(10) 14-27.
o Coroation,C.B., & Orden, D. Pakistan’s Cotton and Textile
Economy. Intersectoral Linkages and Effects on
Rural and Urban Poverty, 22.