The State of Manufacturing in Pakistan

Rajah Rasiah and Nazia Nazeer ()
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Nazia Nazeer: Department of Economics, University of Malaya

Lahore Journal of Economics, 2015, vol. 20, issue Special Edition, 205-224

Abstract: The history of successful industrializers, such as South Korea and Taiwan, shows a systematic shift in the production structure from low- to high- value added activities in manufacturing and its resulting impact on agriculture, mining and services. Within manufacturing, the transformation is seen in both a movement from low-value added sectors, such as apparel making, to high-tech activities, such as automotive and electronics products, and, within particular industries, vertical integration into knowledge-intensive activities. Pakistan’s failure to engender the conditions to stimulate technological upgrading within its leading manufacturing industry of clothing, and a shift away to higher-value added industries is the prime reason why the country has not achieved rapid growth in GDP per capital over the long-term. This paper discusses Pakistan’s stagnation in manufacturing over the period 1960-2013 against the experience of the rapid industrializers of South Korea, Taiwan and Malaysia. Drawing on empirical evidence it argues that Pakistan requires a dynamic industrial policy that focuses on technological upgrading in its existing manufacturing sectors and the creation of competitive advantage in high value-added sectors if the country is to experience sustained long-term economic growth.

Keywords: Manufacturing; industries; policy; Pakistan (search for similar items in EconPapers)
JEL-codes: L60 O25 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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