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Total Factor Productivity and Economic Growth in Pakistan: A Five Decade Overview

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  • Omer Siddique

    (Senior Research Economist, Pakistan Institute of Development Economics, Islamabad.)

Abstract

This paper traces Pakistan’s TFP and GDP growth from 1972 to 2019. The analysis shows that Pakistan’s TFP and economic growth have declined over time. The sectoral—agriculture, industry, and services—trends are also not different. The TFP and GDP growth rates of the total economy and the three sectors were the highest in the 1980s. In general, Pakistan's economic growth has been driven by factor accumulation, except for in the 1980s and the 2010s. The analysis further shows that whenever attempts were made to deregulate and liberalize the economy, it resulted in higher TFP growth and consequently in higher GDP growth. Similarly, macroeconomic and political stability also seems to be important factors in higher TFP and GDP growth. The comparison with other countries shows that Pakistan’s TFP growth performance has been reasonable, especially compared with India. However, the experience of other countries shows that to achieve GDP growth above 8 percent, Pakistan needs to enhance its productivity growth to 3 percent or above.

Suggested Citation

  • Omer Siddique, 2020. "Total Factor Productivity and Economic Growth in Pakistan: A Five Decade Overview," PIDE-Working Papers 2020:11, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:2020:11
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    References listed on IDEAS

    as
    1. Rashid Amjad & Namra Awais, 2016. "Pakistan’s Productivity Performance and TFP Trends, 1980–2015: Cause for Real Concern," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 33-63, September.
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    5. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(3), pages 249-283.
    6. Robert J. Barro, 1999. "Inequality, Growth, and Investment," NBER Working Papers 7038, National Bureau of Economic Research, Inc.
    7. Hummera Saleem & Malik Shahzad & Muhammad Bilal Khan & Bashir Ahmad Khilji, 2019. "Innovation, total factor productivity and economic growth in Pakistan: a policy perspective," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-18, December.
    8. Charles R. Hulten, 2000. "Total Factor Productivity: A Short Biography," NBER Working Papers 7471, National Bureau of Economic Research, Inc.
    9. T. N. Srinivasan, 2005. "Productivity and Economic Growth in South Asia and China," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 479-503.
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    Cited by:

    1. Omer Siddique, 2022. "The Determinants of Total Factor Productivity Growth in Pakistan: An Exploration," PIDE-Working Papers 2022:4, Pakistan Institute of Development Economics.
    2. Lovo,Stefania & Varela,Gonzalo J., 2020. "Internationally Linked Firms, Integration Reforms and Productivity : Evidence from Pakistan," Policy Research Working Paper Series 9349, The World Bank.
    3. Pide, 2023. "Pakistan: One Year Growth Strategy (Policy)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(2), pages 265-280.
    4. Stefania Lovo & Gonzalo Varela, 2022. "Internationally Linked Firms and Productivity in Pakistan: A Look at the Top End of the Distribution," Journal of Development Studies, Taylor & Francis Journals, vol. 58(10), pages 2110-2131, October.
    5. Iftikhar Ahmad & Usman Qadir, 2021. "Inviting FDI: Is Pakistan an Attractive Destination?," PIDE Knowledge Brief 2021:34, Pakistan Institute of Development Economics.
    6. Durr-e-Nayab & Muhammad Nasir & Junaid Alam Memon & Omer Siddique, 2021. "The Economic Cost of Tobacco-Induced Diseases in Pakistan," PIDE Research Report 2021:2, Pakistan Institute of Development Economics.

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    Keywords

    Total Factor Productivity; GDP Growth; Agriculture; Industry; Services;
    All these keywords.

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