This paper develops Pakistan KLEMS database for seven industries on the pattern of internationally comparable data of EU KLEMS. The paper uses this database to evaluate the sources of output growth and also derives measures of multifactor productivity at the industry level. Our analysis of data from 1980 to 2010 reveals some interesting patterns in the time-path of MFP growth. We find that MFP growth has been positive only in agriculture, paper and paper products and machinery industries while MFP growth has been negative in all other industries. Factor accumulation (rather than MFP growth) has played a key role in the growth of output in all industries, except agriculture. We find strong evidence to suggest that capital to labor ratio is declining in agriculture overtime, which indicates the increasing reliance of agriculture on labor input rather than capital input. Intermediate inputs to output ratio has also increased in agriculture since 1995. However, at least since 1990s the demand for labor has continued to fall in all other industries while the demand for capital has continued to increase. The rising demand for capital includes the impact of new investments on intangibles due to advances in information technology. However, some of the lost demand for labor may have gone to services sector, which is growing in most industries.
Burki, A.A.; Hussain, S.M.; Khan, M.A. Pakistan KLEMS Database and Productivity Measurement at the Industry Level. International Growth Centre (IGC), London, UK (2016) 44 pp.