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An Investigation of Firm Heterogeneity in the Constraints to Development and Growth in Pakistan


  • Sajjad Moghal

    (Deputy General Manager of the Policy and Planning Division, Small and Medium Enterprise Development Authority, Lahore, Pakistan.)

  • Wade D. Pfau

    (National Graduate Institute for Policy Studies (GRIPS), Tokyo, Japan.)


This study considers the importance of firm characteristics in explaining the degree of business constraints facing Pakistani firms in the Investment Climate Survey. We quantify how firms with differing characteristics experience particular problems. After controlling for other factors, the largest differences in responses to business constraints occur among firms that vary by manufacturing industry, and among firms operating under different ownership structures or selling in different markets. In some cases, firm size and firm location also play an important role. The age of the firm generally does not lead to significant differences. These results account for the heterogeneity of firms better than others, and may be important for policy-makers to develop more specific approaches to fostering the investment climate.

Suggested Citation

  • Sajjad Moghal & Wade D. Pfau, 2009. "An Investigation of Firm Heterogeneity in the Constraints to Development and Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(1), pages 1-22.
  • Handle: RePEc:pid:journl:v:48:y:2009:i:1:p:1-22

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    References listed on IDEAS

    1. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, vol. 54(1), pages 1-31, October.
    2. A. R. Kemal, 1993. "Why Do Small Firms Fail to Graduate to Medium and Large Firms in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 1249-1257.
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    More about this item


    Pakistan; Investment Climate; Business Constraints;

    JEL classification:

    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General


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