Determinants of Total Factor Productivity in Pakistan

Abstract

The role of productivity in accelerating the pace of economic growth is well recognized in economic literature and this paper shows that Pakistan’s case is no exception. The purpose of the paper was also to see the effect of government fiscal policy, monetary policy and other economic measures on TFP. It shows that these policies affect TFP through human capital endowments of employed labor force, providing better physical infrastructure and other facilitation to incorporate technology in the production process. Using data of the Pakistan economy from 1973 to 2006 both at aggregate and dis-aggregated levels i.e. Agriculture, Manufacturing, Construction, Electricity and Gas, and Other Sectors, the paper has tried to explain TFP for seven sub-periods equally divided into five years.Productivity; Growth; Human Capital; employment; TFP;