Manufacturing's Contribution to Pakistan's Economic Expansion: Commodity - or Service-Led Growth

The sources of growth in any country can be examined from several different perspectives, each suggestive of policy actions undertaken by the government 1 the factors of production--the relative contribution of labour, capital and the like to overall output 2 the major sources of demand--consumption, investment, exports and 3 the sectoral contribution to growth--the contribution made by agriculture, manufacturing, etc. With regard to the sectoral contributions to growth in Pakistan, Burney 1986 found over the period 1960-85 that the commodity-producing sectors agriculture and manufacturing accounted for then 40 of the growth in GDP, the major crops being the main source of the varying contribution of agriculture, while in the case of manufacturing, the large-scale sectors output accounted for more than 60 of the contribution. The Pakistan economy has gone through a number of major changes since 1985. In particular but especially from 1988 onwards progress has been especially strong in the area of freeing the private sector from regulation and artificial price distortions. In addition, a complementary privatisation programme was launched with the aim of reducing the role of the public sector in manufacturing and services. As a side benefit, the programme was seen as alleviating the governments financial and administrative burden and creating new opportunities for the private sector. While growth in large-scale manufacturing output has not accelerated in recent years nor has its overall contribution to GDP growth increased, there is hope particularly among official policy-makers that this activity is finally beginning to play the classic role of a leading sector.