the intended target group. we have therefore decided to adopt a holistic, “ let thousand flowers bloom ”, and inclusive strategy for promotion and spread of microfinance in pakistan. this strategy consists of the following six elements. first, there is a strong political commitment towards supporting microfinance as an integral tool of poverty alleviation program. president of pakistan has taken keen personal interest in the nurturing and growth of this sector and has directed the ministry of finance to monitor and track the microfinance sector on a regular basis. the government has invited the world bank, adb and other bilateral donors to actively assist us in this sector. consequently the enabling environment for development and growth of mf is highly conducive. the constraints, snags and problems faced during the implementation of the program are removed in consultation and full involvement of the stakeholders. second, the program involves multiple actors and institutions - community organizations, ngos, public sector, private sector, rural support programs - in the delivery of microfinance. the extent of poverty prevailing in pakistan requires ‘ all hands - on the deck ’ approach rather than and exclusive monopoly of the government or the public sector as has been the case in the past. khushali bank is owned by several leading financial institutions - private, public and foreign - rather than by the government of pakistan. this has allowed it to function in a professional manner. third, the complementarities between microfinance and other elements of poverty alleviation such as investment, infrastructure, social services and capacity building are clearly recognized and built in the program. income generation by the poor cannot take place only through availability of credit if there is no infrastructure, or markets for selling their produce. similarly without building the knowledge base and enlarging capacity of the poor there won ’ t be any scope for sustainable microfinance. fourth, the government is experimenting with a variety of institutional models for delivery mechanisms and outreach to the poor. for example, we have a wholesale organization such as ppaf which is successfully disbursing a $ 100 million line of credit provided by the world bank. we have khushali bank which is a retail bank and has already reached out to 100, 000 customers and is targeted at 700, 000 by 2007. then there is first mcirofinance bank established in the private sector which is expanding its branch network throughout the country. we have integrated program vehicles such as the nrsp, prsp etc. which combine micro

not very promising. they are still stuck in the low technology exports particularly textiles and clothing which have a declining shares in the world trade. thus the need to overcome the skill obsolescence and turn towards medium and high technology exports was never as apparent as it is today. one particular means through which this change in the composition of exports can be accelerated is by removing the barriers and constraints in the way of foreign investors and multinational corporations ( mncs ). fdi is an important force for integration for this as mncs have set up supply chains and integrated production networks that tend to locate each stage of production in the country with the lowest cost. affiliates of a mnc in one country often export to another for eventual sales in a third country market. these affiliates act as the on - the - job training grounds for the acquisition and dissemination of the skills needed for production and minimizing costs. these skills are then disseminated and multiplied throughout other firms in the country. ( f ) there is a very little intra - regional trade - taking place in south asia. intraregional trade has remained stagnant at less than 2 % of the total trade in the last twenty - five years. a study carried out by the pakistan ministry of commerce in 1996 concluded that due to low transportation costs, cultural similarities which influence taste and cause profitable complementarities to emerge and low transaction costs, the economic benefits of liberalizing trade with india outweigh costs. despite this, the trade between the two neighbouring countries has remained negligible. regional trading arrangements have made a huge difference in north america, europe and east asia, but they have been unsuccessful in south asia. the recent attempt to revitalize saarc is in the right direction and will stimulate trade and growth but only to the extent that it unleashes competition that lowers domestic prices, enables achieving economies of scale and acquiring new technology. safta arrangements can be successful in the coming year but they require a number of important preparatory measures. these are described below : • trade facilitation through expeditious border crossings, quick custom clearance, efficient port facilities, improved transport links should precede or take place simultaneously with the expansion of volume of cross border trade. • domestic tax, tariff and subsidy policies that affect production and trade incentives should be harmonized to avoid recurrence of trade disputes and frequent use of anti dumping laws. as india provides a lot of subsidies to its producers in various forms and shapes the smaller