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

Author

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  • Azam Chaudhry

    (Lahore School of Economics, Pakistan.)

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.

Suggested Citation

  • Azam Chaudhry, 2009. "Total Factor Productivity Growthin Pakistan: An Analysis of the Agricultural and Manufacturing Sectors," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 14(Special E), pages 1-16, September.
    • Handle: RePEc:lje:journl:v:14:y:2009:i:sp:p:1-16
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    References listed on IDEAS

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    Cited by:

    1. Eita, Joel Hinaunye & Pedro, Marcio Jose, 2020. "Modelling total factor productivity in a developing economy: evidence from Angola," MPRA Paper 101304, University Library of Munich, Germany, revised 30 Apr 2020.
    2. 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.
    3. Wolassa Lawisso Kumo, 2017. "Working Paper 263 - Factor Productivity and Potential Output Growth in South Africa," Working Paper Series 2374, African Development Bank.
    4. Tayebi, Zahra & Fulginiti, Lilyan E., 2016. "Agricultural Productivity and Climate Change in the Greater Middle East," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230019, Southern Agricultural Economics Association.
    5. Asif Reza Anik & Sanzidur Rahman & Jaba Rani Sarker, 2017. "Agricultural Productivity Growth and the Role of Capital in South Asia (1980–2013)," Sustainability, MDPI, vol. 9(3), pages 1-24, March.

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    More about this item

    Keywords

    Growth; capital; labor; total factor productivity.;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E0 - Macroeconomics and Monetary Economics - - General
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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