Trade Reforms and Productivity Growth in Manufacturing Industries of Pakistan

Authors

  • Ansa Nazli PhD Scholar, School of Economic Sciences, Federal Urdu University of Arts Science & Technology, Islamabad, Pakistan.
  • Rehana Siddiqui Head, Department of Environmental Economics,Pakistan Institute of Development Economics, Islamabad, Pakistan
  • Imran Hanif Assistant Professor, Head of Economics Department, NUR International University, Model Town Lahore, Pakistan

DOI:

https://doi.org/10.26710/reads.v4i2.404

Keywords:

DEA, Efficiency, Trade liberalization, Malmquist, Manufacturing, TFP, Technical change, GMM.

Abstract

Trade has significant influence on total factor productivity (TFP) growth. There is lack of research at level in Pakistan This paper investigates to what extent trade liberalization affects productivity growth employing endogenous growth model. Using DEA-Malmquist index to panel data in the first step we examine TFP growth, and decompose it into technological change and efficiency change. We found technological change is the key source of improvement in productivity growth.  In the second step, we employ generalized method of moments (GMM) to assess the effect of trade liberalization on productivity growth and its components. We found trade liberalization, and other variables have substantial effect on productivity growth through the channels of learning by doing, knowledge spillovers, technology diffusion, and transformation. The results also support the hypothesis that human capital plays a crucial role in the creation, promotion, and absorption of technology. The study emphasis on the need to invest in human capital with the latest and scientific education to nurture human skills.

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Published

2020-07-25

How to Cite

Ansa Nazli, Rehana Siddiqui, & Imran Hanif. (2020). Trade Reforms and Productivity Growth in Manufacturing Industries of Pakistan. Review of Economics and Development Studies, 4(2), 199-207. https://doi.org/10.26710/reads.v4i2.404