Islamabad. Pakistan’s average productivity growth from 2010 to 2020 was just 1.5 percent. Significantly, productivity growth is an important contributor to economic growth. The study was carried out jointly by the Ministry of Planning and the Pakistan Institute of Developmental Economics (PIDE), a think tank, Dawn newspaper reported. The study used listed and unlisted data from 1,321 firms divided into 61 sectors to estimate productivity growth in the country.
According to the report, sectors with high productivity growth were mostly based in services or technology, while sectors with moderate to low or negative productivity growth were in the manufacturing sector. Total factor productivity (TFP) growth is an important determinant of long-term output growth. The study found that economies with TFP growth of more than three percent experienced GDP growth rates of eight percent or more, while those with TFP growth of less than three percent experienced GDP growth between three percent and seven percent.
According to the study, the growth of both TFP and GDP in Pakistan has been erratic since the early 1970s. TFP growth has also been negative in some years. TFP growth has been around two percent over the past few decades. The study divided the 1,321 firms into 61 sectors. The figures for each of these firms are from 2010 to 2020. The study results show that between 2010 and 2020, the average TFP growth for all 61 regions included in the analysis was 1.5 percent. Low TFP growth means that the economy has not been productive over time.
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