IDEAS home Printed from https://ideas.repec.org/a/pid/journl/v17y1978i4p385-407.html
   My bibliography  Save this article

The Rental Cost of Capital for the Manufacturing Sector-1959-1960 to 1970-1971

Author

Listed:
  • STEPHEN E. GUISINGER

    (University of Texas/Dallas)

  • SHAHNAZ KAZI

    (Pakistan Institute of Development Economics, Islamabad)

Abstract

Pakistan, like other under-developed countries, is faced with a situation where factor prices do not reflect their scarcity values, thereby leading to a waste of valuable resources in the form of highly capital intensive techniques and excess capacity in the manufacturing sector. Low costs of using capital in Pakistan have been attributed to a combination of factors e.g. low rates of interest, overvaluation of domestic currency, low tariffs on machinery imports. and fiscal incentives such as tax holidays and accelerated depreciation aimed at encouraging investment. In this paper a formula incorporating the effect of various such policy packages on the cost of capital has been used to estimate the market and "real" rental cost of capital over time (1959-1960 to 1970-1971) providing a measure of the degree of distortion introduced into the factor market via government policies.

Suggested Citation

  • Stephen E. Guisinger & Shahnaz Kazi, 1978. "The Rental Cost of Capital for the Manufacturing Sector-1959-1960 to 1970-1971," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 17(4), pages 385-407.
    • Handle: RePEc:pid:journl:v:17:y:1978:i:4:p:385-407
    as

    Download full text from publisher

    File URL: http://www.pide.org.pk/pdf/PDR/1978/Volume4/385-407.pdf
    Download Restriction: no
    ---><---

    More about this item

    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:journl:v:17:y:1978:i:4:p:385-407. 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.

    We have no bibliographic references for this item. You can help adding them by using 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.