The manufacturing sector of any country bears significant importance. Globalisation, and in particular, enhanced exports are generally believed to benefit developing countries. And with Pakistan’s exports concentrated largely in textile and semi-manufactures, the country needs to strengthen this sector. Since the foreigncurrency dominated export prices for developing countries are largely determined in the international market, any downward slide in them exerts a downward slide in foreign-exchange export earnings. It is therefore imperative, for a country like Pakistan, to prevent the decline in manufacturing output, not only to sustain but also to increase the export share and hence to gain external competitiveness in this sector.