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Liberalization and Productivity Growth: The Case of Manufacturing Industry in Nepal

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  • Kishor Sharma
  • Sisira Jayasuriya
  • Edward Oczkowski

Abstract

The proposition that liberalization improves productivity growth is examined using data from Nepalese manufacturing-a least developed country that implemented trade liberalization during the 1980s. Productivity growth in general was negative in both the preand post-liberalization periods, but a marginal improvement was detected in the latter period in that the decline in productivity growth was arrested. Higher productivity growth took place in industries with relatively large-scale production and foreign investment. The magnitude of the impact of foreign investment, however, depends on the incentive environment. The analysis suggests that, while trade and exchange rate policy reforms may be a necessary condition for improving productivity growth in least developing countries, they are not sufficient. Shortages of human capital and physical infrastructure need to be redressed if potential productivity improvements are to be fully achieved.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Oxford Development Studies.

Volume (Year): 28 (2000)
Issue (Month): 2 ()
Pages: 205-222

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Handle: RePEc:taf:oxdevs:v:28:y:2000:i:2:p:205-222

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Cited by:
  1. Dolage, D.A.R. & Sade, Abu Bakar & Ahmed, Elsadig Musa, 2010. "The influence of Flexible Manufacturing Technology adoption on productivity of Malaysian manufacturing industry," Economic Modelling, Elsevier, vol. 27(1), pages 395-403, January.
  2. Edward Oczkowski & Kishor Sharma, 2005. "Determinants of Efficiency in Least Developed Countries: Further Evidence from Nepalese Manufacturing Firms," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 617-630.
  3. Deb Kusum Das, 2007. "Trade Liberalization and Industrial Productivity: An Assessment of Developing Country Experiences," Working Papers id:1009, eSocialSciences.
  4. Pamela Coke Hamilton & Yvonne Tsikata & Emmanuel Pinto Moreira, 2009. "Accelerating Trade and Integration in the Caribbean : Policy Options for Sustained Growth, Job Creation, and Poverty Reduction," World Bank Publications, The World Bank, number 2652.
  5. L. Alan Winters & Neil McCulloch & Andrew McKay, 2004. "Trade Liberalization and Poverty: The Evidence So Far," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 72-115, March.
  6. Kishor Sharma, 2000. "Liberalization and Structural Change: Evidence from Nepalese Manufacturing," Working Papers 812, Economic Growth Center, Yale University.
  7. Jayanthakumaran, Kankesu, 2002. "The Impact of Trade Liberalisation on Manufacturing Sector Performance in Developing Countries: A Survey of the Literature," Economics Working Papers wp02-07, School of Economics, University of Wollongong, NSW, Australia.
  8. Akinlo, Anthony Enisan, 2005. "Impact of Macroeconomic Factors on Total Factor Productivity in Sub-Saharan African Countries," Working Paper Series RP2005/39, World Institute for Development Economic Research (UNU-WIDER).

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