Cotton as the Cornerstone: Analyzing Its Impact on Home Textile Production in Pakistan

Abstract

The textile industry of Pakistan is among the most significant economic sectors with respect to employment and exporting earnings. It primarily depends on home textiles, with cotton as a core raw material. This research uses the time series data from 2003 through 2023 to apply an Ordinary Least Squares regression framework for estimating the impact of domestic cotton production, cotton imports, and electricity consumption together to shape export performance. As a result, a 1% increment in the production of cotton within the country is reflected by 26.4% growth in home textile exports; it is indeed the very foundation on which industrial output is sustained. Cotton imports complement the domestic supply to fill in shortfall during the time of production shortfall. Above all, electricity consumption tops the heels as the most important factor that reliable and affordable electricity translates into productivity increases and decreases in production costs. Diagnostic tests (multicollinearity, autocorrelation, heteroskedasticity) affirm the model’s statistical validity, reinforcing the robustness of these findings. This study strongly highlights the need for policies promoting agricultural innovation, including new high-yielding varieties of cotton and precision farming aimed at increasing domestic production. Concurrently, strategic import policies and investments in energy infrastructure would be critical to alleviating supply chain vulnerabilities and mitigating power shortages. By establishing the empirical links between cotton viability and energy reliability on export competitiveness, this study offers operational lessons to policymakers on how to strengthen a sector critical for Pakistan's economic future. This line of inquiry can be pursued further in future research through firm-level investigations, explorations of synthetic substitutes to cotton, or assessments into trade policy effectiveness, all of which would enhance pathways to strengthening the international competitiveness of the sector.