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Total Factor Productivity Growthin Pakistan: An Analysis of the Agricultural and Manufacturing Sectors

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  • Azam Chaudhry

    ()
    (Lahore School of Economics, Pakistan.)

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    Abstract

    This paper uses Cobb-Douglas and translog production functions to calculate total factor productivity (TFP) in Pakistan over the period 1985 – 2005, first for the manufacturing and agricultural sectors individually, then for the economy as a whole. Inmanufacturing, productivity increased at an average of 2.4% per year with output growth being driven mainly by increases in capital. Despite the limitations of the available agricultural data, we have determined that productivity has grown at an average rate of 1.75% per year in this sector. The major drivers of growth in agriculture have been increases in labor and TFP.These estimates of sectoral TFP put Pakistan at par or above average as compared to other developing countries, but lagging behind the East Asian economies. For the economy as a whole, TFP has increased at an average rate of only 1.1% a year in Pakistan, resulting in almost three quarters of GDP growth attributed to increases in labor and the capital stock.

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    File URL: http://121.52.153.179/JOURNAL/special%202009/1%20Dr.%20Azam.pdf
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    Bibliographic Info

    Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

    Volume (Year): 14 (2009)
    Issue (Month): Special Edition (September)
    Pages: 1-16

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    Handle: RePEc:lje:journl:v:14:y:2009:i:sp:p:1-16

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    Web page: http://www.lahoreschoolofeconomics.edu.pk/EconomicsJournal/LJEIntro.aspx
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    Keywords: Growth; capital; labor; total factor productivity.;

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    1. Scott L. Baier & Gerald P. Dwyer & Robert Tamura, 2006. "How Important are Capital and Total Factor Productivity for Economic Growth?," Economic Inquiry, Western Economic Association International, vol. 44(1), pages 23-49, January.
    2. Martin, Will & Mitra, Devashish, 1999. "Productivity growth and convergence in agriculture and manufacturing," Policy Research Working Paper Series 2171, The World Bank.
    3. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity across Industries and Countries: Time Series Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 135-46, February.
    4. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
    5. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    6. Mahmood Hasan Khan, 1997. "Agricultural 'Crisis' in Pakistan: Some Explanations and Policy Options," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(4), pages 419-466.
    7. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1, May.
    8. Barro, Robert J, 1999. " Notes on Growth Accounting," Journal of Economic Growth, Springer, vol. 4(2), pages 119-37, June.
    9. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Chapters, in: Resource and Output Trends in the United States Since 1870, pages 1-23 National Bureau of Economic Research, Inc.
    10. Mark W. Rosegrant & Robert E. Evenson, 1993. "Agricultural Productivity Growth in Pakistan and India: A Comparative Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 433-451.
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