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Abstract

This study examines the impact of trade liberalization on industrial productivity for a panel of twenty seven 3-digit manufacturing industries in Pakistan over the period 1980-2006. Following Olley and Pack’s 1996 Control Function Approach CFA we deal with the endogeneity arises from unobserved productivity shocks. Using a variant of Cobb-Douglas production function, in the first step we estimate output elasticities. We find positive output elasticities with respect to labor, capital and raw materials for the pre-trade liberalization period 1981-1995 and post-trade liberalization period 1996-2006. For the pre-liberalization, we observed positive output elasticity with respect to energy, while it turns out to be negative in the post-liberalization period; probably due to energy crisis in Pakistan. In the second stage, we estimate total factor productivity TFP and examine the impact of trade liberalization on TFP for pre-and post-trade liberalization regimes. The results reveal that trade liberalization proxied by excise duty has positive but negligible impact on TFP in the pre-as well as post-liberalization periods. On the other hand, effective rate of protection exerts large negative impact on TFP in the post-liberalization than the pre-liberalization period.



Item Type: MPRA Paper -

Original Title: Trade Liberalization and Industrial Productivity: Evidence from Pakistan-

English Title: Trade Liberalization and Industrial Productivity: Evidence from Pakistan-

Language: English-

Keywords: Trade Liberalization, Endogeneity and Production Function, Industrial Panel Data-

Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal ModelsD - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; CapacityF - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade OrganizationsL - Industrial Organization > L6 - Industry Studies: Manufacturing > L60 - General-





Autor: Ahmed, Gulzar

Fuente: https://mpra.ub.uni-muenchen.de/70744/



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