Economic geography and misallocation in Pakistan’s manufacturing hub

Theresa Chaudhry, Muhammad Haseeb () and Maryiam Haroon
Additional contact information
Muhammad Haseeb: University of Warwick

The Annals of Regional Science, 2017, vol. 59, issue 1, No 8, 189-208

Abstract: Abstract In this article, we explore whether localization of industries can reduce economic distortions and dispersion in total factor productivity (TFP) among firms in Punjab, Pakistan’s largest province economically. We consider two types of misallocation: (i) dispersion in the distribution of output-based TFP (TFPQ), in particular the survival of low productivity firms in the left tail; and (ii) dispersion in revenue-based TFP (TFPR), indicative of allocative inefficiency. The results are mixed: On the one hand, we find that the distribution of TFPQ is less dispersed in more agglomerated areas, measured by the localization quotient, local productive concentration, and average firm size. At the same time, we find that average TFPQ is also positively related to localization, especially the presence of small firms in the same sector, even though own-firm TFP is lowest for small firms. On the other hand, we do not find evidence that agglomeration improves allocative efficiency measured as deviations in TFPR from the sector average, concluding rather that greater localization of small firms is associated with firms being more output and capital constrained.

JEL-codes: D24 L11 L25 L6 R12 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s00168-017-0824-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:anresc:v:59:y:2017:i:1:d:10.1007_s00168-017-0824-7

Ordering information: This journal article can be ordered from
http://link.springer.com/journal/168

DOI: 10.1007/s00168-017-0824-7

Access Statistics for this article

The Annals of Regional Science is currently edited by Martin Andersson, E. Kim and Janet E. Kohlhase

More articles in The Annals of Regional Science from Springer, Western Regional Science Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().