IDEAS home Printed from https://ideas.repec.org/p/pid/wpaper/202011.html
   My bibliography  Save this paper

Total Factor Productivity and Economic Growth in Pakistan: A Five Decade Overview

Author

Listed:
  • Omer Siddique

    (Senior Research Economist, Pakistan Institute of Development Economics, Islamabad.)

Abstract

This paper traces Pakistan’s TFP and GDP growth from 1972 to 2019. The analysis shows that Pakistan’s TFP and economic growth have declined over time. The sectoral—agriculture, industry, and services—trends are also not different. The TFP and GDP growth rates of the total economy and the three sectors were the highest in the 1980s. In general, Pakistan's economic growth has been driven by factor accumulation, except for in the 1980s and the 2010s. The analysis further shows that whenever attempts were made to deregulate and liberalize the economy, it resulted in higher TFP growth and consequently in higher GDP growth. Similarly, macroeconomic and political stability also seems to be important factors in higher TFP and GDP growth. The comparison with other countries shows that Pakistan’s TFP growth performance has been reasonable, especially compared with India. However, the experience of other countries shows that to achieve GDP growth above 8 percent, Pakistan needs to enhance its productivity growth to 3 percent or above.

Suggested Citation

  • Omer Siddique, 2020. "Total Factor Productivity and Economic Growth in Pakistan: A Five Decade Overview," PIDE-Working Papers 2020:11, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:2020:11
    as

    Download full text from publisher

    File URL: https://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-2020-11.pdf
    File Function: First Version, 2020
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(3), pages 249-283.
    2. Robert J. Barro, 1999. "Inequality, Growth, and Investment," NBER Working Papers 7038, National Bureau of Economic Research, Inc.
    3. Hummera Saleem & Malik Shahzad & Muhammad Bilal Khan & Bashir Ahmad Khilji, 2019. "Innovation, total factor productivity and economic growth in Pakistan: a policy perspective," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-18, December.
    4. Charles R. Hulten, 2000. "Total Factor Productivity: A Short Biography," NBER Working Papers 7471, National Bureau of Economic Research, Inc.
    5. Young Eun Kim & Norman V. Loayza, 2019. "Productivity Growth: Patterns and Determinants across the World," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 42(84), pages 36-93.
    6. Amjad, Rashid & Awais, Namra, 2016. "Pakistan's productivity performance and TFP trends 1980-2015: Cause for real concern," MPRA Paper 75017, University Library of Munich, Germany.
    7. T. N. Srinivasan, 2005. "Productivity and Economic Growth in South Asia and China," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 479-503.
    8. Bert Balk, 2001. "Scale Efficiency and Productivity Change," Journal of Productivity Analysis, Springer, vol. 15(3), pages 159-183, May.
    9. Rashid Amjad & Namra Awais, 2016. "Pakistan’s Productivity Performance and TFP Trends, 1980–2015: Cause for Real Concern," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 33-63, September.
    10. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Omer Siddique, 2022. "The Determinants of Total Factor Productivity Growth in Pakistan: An Exploration," PIDE-Working Papers 2022:4, Pakistan Institute of Development Economics.
    2. Stefania Lovo & Gonzalo Varela, 2022. "Internationally Linked Firms and Productivity in Pakistan: A Look at the Top End of the Distribution," Journal of Development Studies, Taylor & Francis Journals, vol. 58(10), pages 2110-2131, October.
    3. Lovo,Stefania & Varela,Gonzalo J., 2020. "Internationally Linked Firms, Integration Reforms and Productivity : Evidence from Pakistan," Policy Research Working Paper Series 9349, The World Bank.
    4. Pide, 2023. "Pakistan: One Year Growth Strategy (Policy)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(2), pages 265-280.
    5. Iftikhar Ahmad & Usman Qadir, 2021. "Inviting FDI: Is Pakistan an Attractive Destination?," PIDE Knowledge Brief 2021:34, Pakistan Institute of Development Economics.
    6. Durr-e-Nayab & Muhammad Nasir & Junaid Alam Memon & Omer Siddique, 2021. "The Economic Cost of Tobacco-Induced Diseases in Pakistan," PIDE Research Report 2021:2, Pakistan Institute of Development Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Athanasoglou, Panayiotis P. & Georgiou, Evangelia A. & Staikouras, Christos C., 2009. "Assessing output and productivity growth in the banking industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1317-1340, November.
    2. Sanjoy Kumar Saha, 2021. "Sources of Total Factor Productivity in South Asia," Review of Market Integration, India Development Foundation, vol. 13(2-3), pages 154-176, December.
    3. Tian, Xu & Yu, Xiaohua, 2012. "The Enigmas of TFP in China: A meta-analysis," China Economic Review, Elsevier, vol. 23(2), pages 396-414.
    4. Naseem Faraz & Omer Siddique & Asim Saeed, 2023. "Sectoral Total Factor Productivity In Pakistan," PIDE Research Report 2023:1, Pakistan Institute of Development Economics.
    5. Selin Ozyurt, 2009. "Total Factor Productivity Growth in Chinese Industry: 1952-2005," Oxford Development Studies, Taylor & Francis Journals, vol. 37(1), pages 1-17.
    6. Omer Siddique, 2022. "The Determinants of Total Factor Productivity Growth in Pakistan: An Exploration," PIDE-Working Papers 2022:4, Pakistan Institute of Development Economics.
    7. Ghulam Sarwar & Muhammad Fayyaz Sheikh & Iqra Rabnawaz, 2021. "Factors Affecting Labor Productivity: An Empirical Evidence from Pakistan," Journal of Economic Impact, Science Impact Publishers, vol. 3(3), pages 221-226.
    8. Prados de la Escosura, Leandro & Rosés, Joan R., 2008. "Proximate causes of economic growth in Spain, 1850-2000," IFCS - Working Papers in Economic History.WH wp08-12, Universidad Carlos III de Madrid. Instituto Figuerola.
    9. Nicholas Tsounis & Ian Steedman, 2021. "A New Method for Measuring Total Factor Productivity Growth Based on the Full Industry Equilibrium Approach: The Case of the Greek Economy," Economies, MDPI, vol. 9(3), pages 1-21, August.
    10. Christopher J. O'Donnell, 2010. "Measuring and decomposing agricultural productivity and profitability change ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 527-560, October.
    11. Nelson H. Barbosa Filho, 2005. "Estimating Potential Output : a Survey of the Alternative Methods and their Applications to Brazil," Discussion Papers 1092, Instituto de Pesquisa Econômica Aplicada - IPEA.
    12. Almas Heshmati, 2003. "Productivity Growth, Efficiency and Outsourcing in Manufacturing and Service Industries," Journal of Economic Surveys, Wiley Blackwell, vol. 17(1), pages 79-112, February.
    13. Johanna Melka & Nanno Mulder & Laurence Nayman & Soledad Zignago, 2003. "Skills, Technology and Growth is ICT the Key to Success ? An Analysis of ICT Impact on French Growth," Working Papers 2003-04, CEPII research center.
    14. Agnieszka Gehringer, 2011. "Pecuniary Knowledge Externalities across European Countries—Are there Leading Sectors?," Industry and Innovation, Taylor & Francis Journals, vol. 18(4), pages 415-436.
    15. Khan, Safdar Ullah Khan, 2005. "Macro Determinants of Total Factor Productivity in Pakistan," MPRA Paper 8693, University Library of Munich, Germany, revised 10 Sep 2005.
    16. Timothy C. Sargent & Edgard R. Rodriguez, 2000. "Labour or Total Factor Productivity: Do We Need to Choose?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 1, pages 41-44, Fall.
    17. Wolassa L. Kumo, 2022. "Working Paper 362 - Economic Growth, Total Factor Productivity and Output Gap in Sierra Leone," Working Paper Series 2488, African Development Bank.
    18. Michael J. Boskin & Lawrence J. Lau, 2000. "Generalized Solow-Neutral Technical Progress and Postwar Economic Growth," NBER Working Papers 8023, National Bureau of Economic Research, Inc.
    19. Li, Kui-Wai & Liu, Tung, 2011. "Economic and productivity growth decomposition: An application to post-reform China," Economic Modelling, Elsevier, vol. 28(1), pages 366-373.
    20. Nazrul Islam & Erbiao Dai & Hiroshi Sakamoto, 2006. "Role of TFP in China's Growth," Asian Economic Journal, East Asian Economic Association, vol. 20(2), pages 127-159, June.

    More about this item

    Keywords

    Total Factor Productivity; GDP Growth; Agriculture; Industry; Services;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:wpaper:2020:11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Khurram Iqbal (email available below). General contact details of provider: https://edirc.repec.org/data/pideipk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.