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Capacity Utilization in Manufacturing Industries of Pakistan

Abdul Razzaq Kemal and Talat Alauddin
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Talat Alauddin: Pakistan Institute of Development Economics, Islamabad

The Pakistan Development Review, 1974, vol. 13, issue 3, 231-244

Abstract: It is a well-known fact that capital is scarce in most of the developing countries and thus some of the production factors, such as labour, remain -unemployed, leading toa lower growth rate of G.N.P. than would be possible under. full employment. Additions to the stock of capital not only increase the rate of growth but also provide new job opportunities. However, in many developing countries, capital is utilised less than one-third of the time [10,p.381. The underutilization of capital obviously shrinks the growth rate of less developed countries still fUrther. Capacity underutilization discourages technological progress which leads to an inefficient industrial structure. This presents uS with a paradox: if capital is scarce in developing countries, why is it underutilized

Date: 1974
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