Export potential of cottage industry: a case study of Sialkot (Pakistan)

Khan, Rana Ejaz Ali and Khan, Tasnim and Maqsood, Muhammad Farqan (2010): Export potential of cottage industry: a case study of Sialkot (Pakistan). Published in: European Journal of Economics, Finance and Administrative Sciences , Vol. 27, (1 November 2010): pp. 158-164.

Abstract

Sialkot, the export city of Pakistan is earning $900 million per annum by exports. The major exports are the sports goods, surgical instruments, leather products, martial art instruments, musical instruments and sports wear. All these products are value-added by cottage industry. How the export potential of cottage industry in Sialkot may be increased,that is the question. The current paper estimated the export potential of the cottage industry by measuring it through Cobb-Douglas production function. The data has been collected from 354 cottage industrial units selected by random sampling. The results explain that labor, capital, experience and education of entrepreneur, and working conditions enhance the export potential of the units. The labor is more used in cottage industrial units as compared to capital so the elasticity of export production with respect to labor is higher as compared to capital. The football making units and other sports goods producing units use a minor ratio of capital and largely depend upon labor for production. Although leather and surgical producing units use higher ratio of capital in production. The education and experience of the entrepreneur also lead to increased export production. The better working condition increases the export production by raising the productivity of labor. The study proposes the education and training of the individuals involved in cottage industry and provision of good working conditions by the Export Promotion Bureau, Sialkot Chamber of Commerce and Industry and vocational training institutes in their respective areas. The surprising results of the study are that credit availed by the units decrease the export production while distance to market from the unit raises the export production. The relationship between credit and export production explains the misutilization of credit while positive association between distance to market and export production explains the involvement of more number of household members in production in the units away from city as compared to the units situated near to market or city. The misutilization of loaning is needed to be checked.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cottage industry, Pakistan, Exports, Cobb-Douglas production function, Sialkot
• Subjects: N - Economic History > N8 - Micro-Business History; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand

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