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Services-led Growth and Industrial Policy: Lessons for Pakistan

Author

Listed:
  • Sulman Hafeez, Siddiqui
  • Hassan Mujtaba Nawaz, Saleem

Abstract

The recent structural shift of global economy from manufacturing to services sector coupled with the pressure on economies to liberalize their services trade under GATS has brought the theorist and policy makers in services-dominated economies to devise appropriate theoretical and policy response to align their services-dominated economies with their industry, trade, and economic growth and development objectives. The emphasis on industry-led economic growth and development policy under both mercantilist and export-oriented approach has earned little success in developing countries like Pakistan due to lack of R&D base and lack of capital while the approach being highly intensive in both of these factors. Services today contribute more than 50% to the GDP in Pakistan and 44 percent to employment. The inter-sectoral linkages of services with industry imply strong existing and potential spillover effects for value added activities in these sectors. This paper through an extensive review of literature and empirical evidence from Pakistan examines the potential of services-led industrial, trade and growth policy for Pakistan to achieve objectives of value addition and diversification of production, competitiveness, employment, poverty alleviation, sustainable economic growth and development, and stability of external accounts. The proposed alignments in the overall economic growth and development policy, industrial policy and trade policy in line with the global trends and structural dynamics of services sector in Pakistan are discussed.

Suggested Citation

  • Sulman Hafeez, Siddiqui & Hassan Mujtaba Nawaz, Saleem, 2008. "Services-led Growth and Industrial Policy: Lessons for Pakistan," MPRA Paper 75647, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:75647
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    File URL: https://mpra.ub.uni-muenchen.de/75647/1/MPRA_paper_10330.pdf
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    References listed on IDEAS

    as
    1. Dilip Dutta & Nasiruddin Ahmed, 2004. "Trade liberalization and industrial growth in Pakistan: a cointegration analysis," Applied Economics, Taylor & Francis Journals, vol. 36(13), pages 1421-1429.
    2. Rashmi Banga & B.N.Goldar, 2004. "Contribution of services to output growth and productivity in Indian manufacturing: Pre and post reforms," Indian Council for Research on International Economic Relations, New Delhi Working Papers 139, Indian Council for Research on International Economic Relations, New Delhi, India.
    3. Nadeem Ul Haque, 2006. "Awake the Sleeper Within: Releasing the Energy of Stifled Domestic Commerce!," PIDE-Working Papers 2006:11, Pakistan Institute of Development Economics.
    4. Gobind M. Herani & Pervez Wasim & Allah Wasayo Rajar & Riaz Ahmed Shaikh, 2008. "The Nature of Poverty and Its Prospects: Pakistan Evidence," Journal of Global Economy, Research Centre for Social Sciences,Mumbai, India, vol. 4(3), pages 184-195, September.
    5. Haque, Nadeem ul Haque, 2006. "Awake the Sleeper Within: Releasing the Energy of Stifled Domestic Commerce," MPRA Paper 2141, University Library of Munich, Germany.
    6. Ansari, Mohammed I., 1995. "Explaining the service sector growth: An empirical study of India, Pakistan, and Sri Lanka," Journal of Asian Economics, Elsevier, vol. 6(2), pages 233-246.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic growth; industrial policy; Services Sector; Service-led Industrialization;
    All these keywords.

    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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