Another measure of export sophistication is the factor-content of exports. We utilize a new database created by UNCTAD on Revealed Factor Intensity<sup>14</sup> for each good at the HS 6-digit level. Pakistan’s export profile is dominated by goods that are low in both human and physical capital content. The first two graphs on the top panel below plot products with human capital content on the x-axis and physical capital content on the y-axis, with bubble size representing the US dollar amount of exports in 1997 and 2007. The dashed reference lines are median values of revealed human and physical capital for exports (above US$10,000). In both time periods, Pakistan biggest export earners utilized capital way below utilized by median exportson either dimesnion.<sup>15</sup> This contrasts with the performance of successful exporting nations like the Republic of Korea (not shown) whose major exports are also highly intensive in using capital. In Pakistan, the picture for 2007 is more positive, of course, with the median values of capital content increasing, some major export earners using more than the median capital, and simply a greater number of exports earning more than US$10,000 (represented by each dot/bubble).

The two graphs on the bottom panel reflect exports relative to the national endowment points. Between 1997 and 2007, Pakistan’s human capital increased from 2.97 to 4.66, but physical capital (per worker) dropped from 12838 to 11614.5. To explain why a country’s exports cannot be sustained, one of several areas to investigate is whether the exports that die represent attempts to produce goods that require a different mix of factor endowments than available in the economy. If a nation’s endowment point is represented by the intersection of its average stock of physical and human capital, we can see how far or close to the average endowment point are factor intensities of exports.There are several big export earners that existed in 1997 but not in 2007 that embody much more capital than the national average. At the same time, the majority of “new” exports that were active in 2007, but not a decade earlier, are also moderately capital-intensive. It can be hypothesized that, all else equal, ambitious ventures that defy a country’s comparative advantage probably have a higher rate of failure. However, success of exports depends on an array of factors, including search and information costs related to the business of exporting, exchange rate volatility, among others.<sup>16</sup>

> 14 Database available at http://r0.unctad.org/ditc/tab/index.shtm The indices are computed by weighting the factor endowments of all countries exporting a particular product; weights are derived from a modified version of the Revealed Comparative Advantage (RCA). Goods that are predominantly exported by countries rich in human capital are revealed to be intensive in human capital. See Cadot et al. (2009).

> 15 The quadrants are formed by lines corresponding to the _medians_ of capital intensity and log of export values for Pakistan.

> 16 For example, Easterly et al. (2009) discuss the role of fortuity in a random product being a “hit” in a certain destination leading to substantial growth, imitation and concentration of a few successful export items at a given time.

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