State of Technology and Productivity in Pakistan's Manufacturing Industries: Some Strategic Directions to Build Technological Competence‪.‬

Historically, Pakistan's economic growth record, especially of the manufacturing sector, has been quite satisfactory. However, since the late 1980s Pakistan has been facing a slow growth of manufacturing industries, particularly of the large-scale manufacturing units. This has led some economists to express the apprehension that perhaps de-industrialisation is taking place in the country. A careful analysis of the causes of this sluggish growth suggests that one of the main contributory factors is the slow growth in total factor productivity (TFP)--the best overall measure of competitiveness. What has caused this productivity slow-down? For Pakistan there is clear evidence of a relationship between the growth in total factor productivity and the ailing S & T apparatus. The results presented in the study also lend support to the hypothesis that knowledge capital, human capital, openness, and government policies are crucial determinants of total factor productivity growth. Given a liberal economic environment in the country, which is essential to improve efficiency and productivity, the paper offers four strategic directions in order to improve the status of the S & T system in Pakistan: (1) augment the public sector S & T apparatus with the private sector funding and oversight; (2) take measures to upgrade scientific research institutions to the international standard; (3) streamline the technology creation, absorption, and diffusion system; and (4) enhance the demand for S & T in industries. These strategic directions are designed in such a manner that they work together towards a series of phased reforms, which can create incentives and market-based mechanisms to enhance the technology system without relying on a radical shift in the governance element of the bureaucracy. 1. INTRODUCTION