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The investment climate and enterprise performance in rural Pakistan: implications for rural non-farm employment generation

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  • Mona Sur
  • Jian Zhang
  • Kevin Chen

Abstract

This paper provides a descriptive analysis of the profile of village and small-town enterprises in Pakistan drawing on a large-scale survey of enterprises. Although the enterprise sector does not appear to be particularly dynamic, the data indicate that there has been employment growth in this sector. The average annual compound employment growth has been about 1% in village enterprises and 3% in small-town enterprises. Access to formal finance, the cost of finance and cumbersome loan procedures pose major challenges for rural entrepreneurs in Pakistan, particularly in terms of availing of long-term financing for investment purposes. Access to and quality of electricity supply, marketing difficulties and transportation-related problems also pose major obstacles. These obstacles have a negative impact on enterprise productivity and the level of investments made by existing firms and discourage the start-up of new enterprises. Addressing the constraints faced by non-farm business in villages and small towns is needed to promote private investments, generate employment and reduce poverty.

Suggested Citation

  • Mona Sur & Jian Zhang & Kevin Chen, 2014. "The investment climate and enterprise performance in rural Pakistan: implications for rural non-farm employment generation," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(3), pages 488-505, July.
    • Handle: RePEc:taf:rjapxx:v:19:y:2014:i:3:p:488-505
    DOI: 10.1080/13547860.2014.908537
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    References listed on IDEAS

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    1. World Bank, 2004. "Promoting the Rural Non-Farm Sector in Bangladesh : Volume 2. Main Report," World Bank Publications - Reports 14380, The World Bank Group.
    2. World Bank, 2004. "Pakistan - Rural Factor Markets : Policy Reforms for Growth and Equity," World Bank Publications - Reports 14513, The World Bank Group.
    3. World Bank, 2003. "Algeria Investment Climate Assessment," World Bank Publications - Reports 14602, The World Bank Group.
    4. World Bank, 2004. "Promoting the Rural Non-Farm Sector in Bangladesh : Volume 1. Summary Report," World Bank Publications - Reports 14569, The World Bank Group.
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    Cited by:

    1. Mai Huong Giang & Tran Dang Xuan & Bui Huy Trung & Mai Thanh Que & Yuichiro Yoshida, 2018. "Impact of Investment Climate on Total Factor Productivity of Manufacturing Firms in Vietnam," Sustainability, MDPI, vol. 10(12), pages 1-18, December.
    2. Fatma Nur Karaman Kabadurmus, 2021. "Innovation Challenges in South Asia: Evidence from Bangladesh, Pakistan and India," Journal of South Asian Development, , vol. 16(1), pages 100-129, April.
    3. Farrukh Iqbal & Aadil Nakhoda, 2021. "Size and Age as Determinants of Employment Growth among Manufacturing Firms in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 60(2), pages 119-132.
    4. Briones, M.R., 2018. "IFAD RESEARCH SERIES 20 - Transformation and diversification of the rural economy in Asia," IFAD Research Series 280069, International Fund for Agricultural Development (IFAD).
    5. Umesh Shrivastava & Amit Kumar Dwivedi, 2021. "Manifestations of rural entrepreneurship: the journey so far and future pathways," Management Review Quarterly, Springer, vol. 71(4), pages 753-781, October.
    6. Shujaat Farooq & Zunaira Younais, 2018. "Do Non-farm Enterprises Offer Pathways for Upward Mobility in Rural Pakistan? Evidence from Panel Dataset," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 57(2), pages 203-221.
    7. Mellor, John W. & Malik, Sohail J., 2017. "The Impact of Growth in Small Commercial Farm Productivity on Rural Poverty Reduction," World Development, Elsevier, vol. 91(C), pages 1-10.

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