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The State of Manufacturing in Pakistan

Author

Listed:
  • Rajah Rasiah

    (Department of Development Studies, University of Malaya)

  • Nazia Nazeer

    (Department of Economics, University of Malaya)

Abstract

The history of successful industrializers, such as South Korea and Taiwan, shows a systematic shift in the production structure from low- to high- value added activities in manufacturing and its resulting impact on agriculture, mining and services. Within manufacturing, the transformation is seen in both a movement from low-value added sectors, such as apparel making, to high-tech activities, such as automotive and electronics products, and, within particular industries, vertical integration into knowledge-intensive activities. Pakistan’s failure to engender the conditions to stimulate technological upgrading within its leading manufacturing industry of clothing, and a shift away to higher-value added industries is the prime reason why the country has not achieved rapid growth in GDP per capital over the long-term. This paper discusses Pakistan’s stagnation in manufacturing over the period 1960-2013 against the experience of the rapid industrializers of South Korea, Taiwan and Malaysia. Drawing on empirical evidence it argues that Pakistan requires a dynamic industrial policy that focuses on technological upgrading in its existing manufacturing sectors and the creation of competitive advantage in high value-added sectors if the country is to experience sustained long-term economic growth.

Suggested Citation

  • Rajah Rasiah & Nazia Nazeer, 2015. "The State of Manufacturing in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 20(Special E), pages 205-224, September.
    • Handle: RePEc:lje:journl:v:20:y:2015:i:sp:p:205-224
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    References listed on IDEAS

    as
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    Cited by:

    1. Bilal Raza, 2021. "Balance of Payments Constrained Growth in Pakistan - Implications for Development Policy," SBP Working Paper Series 107, State Bank of Pakistan, Research Department.
    2. Ghulam Yahya Khan & Salik Mehboob & Lydia Bares Lopez, 2018. "Deindustrialization and Economic Growth: Empirical Evidence from Pakistan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 6(4), pages 462-475, December.
    3. Nazia Nazeer & Rajah Rasiah, 2016. "Explaining Pakistan’s Premature Deindustrialization," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 351-368, September.
    4. Rajah Rasiah & Shujaat Mubarik & Xiao-Shan Yap, 2017. "Financing Technological Upgrading in East Asia," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 22(Special E), pages 153-182, September.
    5. Rajah Rasiah & Nazia Nazeer, 2016. "Comparing Industrialization in Pakistan and the East Asian Economies," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 167-192, September.

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    More about this item

    Keywords

    Manufacturing; industries; policy; Pakistan;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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