Services-led Growth and Industrial Policy: Lessons for Pakistan

Sulman Hafeez, Siddiqui and Hassan Mujtaba Nawaz, Saleem (2008): Services-led Growth and Industrial Policy: Lessons for Pakistan. Published in: Socioeconomic Challenges Faced By Pakistan (2008)

Abstract

The recent structural shift of global economy from manufacturing to services sector coupled with the pressure on economies to liberalize their services trade under GATS has brought the theorist and policy makers in services-dominated economies to devise appropriate theoretical and policy response to align their services-dominated economies with their industry, trade, and economic growth and development objectives. The emphasis on industry-led economic growth and development policy under both mercantilist and export-oriented approach has earned little success in developing countries like Pakistan due to lack of R&D base and lack of capital while the approach being highly intensive in both of these factors. Services today contribute more than 50% to the GDP in Pakistan and 44 percent to employment. The inter-sectoral linkages of services with industry imply strong existing and potential spillover effects for value added activities in these sectors. This paper through an extensive review of literature and empirical evidence from Pakistan examines the potential of services-led industrial, trade and growth policy for Pakistan to achieve objectives of value addition and diversification of production, competitiveness, employment, poverty alleviation, sustainable economic growth and development, and stability of external accounts. The proposed alignments in the overall economic growth and development policy, industrial policy and trade policy in line with the global trends and structural dynamics of services sector in Pakistan are discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic growth; industrial policy; Services Sector; Service-led Industrialization
• Subjects: L - Industrial Organization > L8 - Industry Studies: Services; L - Industrial Organization > L5 - Regulation and Industrial Policy > L52 - Industrial Policy ; Sectoral Planning Methods; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination

References

ADB Institute (2004), “Industrial Competitiveness: The Challenge for Pakistan” Asian Development Bank, Resident Mission, Pakistan, Publication Stock No. 060604, October 2004.

ADB Technical Assistance Report (2008), “Islamic Republic of Pakistan: competitiveness and structural transformation in Pakistan” Asian Development Bank, Project number: 41661, January 2008.

Ali, Shaukat M. (2000) “Trade and industrial policy in Pakistan: post Uruguay round challenges” Paper prepared for World Bank’s WTO-2000 Project

Ansari, Muhammad I. (1995) “Explaining the services sector growth: an empirical study of India, Pakistan and Sri Lanka”, Journal of Asian Economics, Volume 6, No, 2, 1995, 233-246.

Banga, Rashi and B. N Goldar (2004) “Contribution of services to output growth productivity in Indian manufacturing: pre and post reform”, Indian Council for Research on International Economic Relations, working paper no. 139, August, 2004

Banga, Rashmi (2005) “Critical issues in India’s services-led growth” Indian Council for Research on International Economic Relations, working paper no. 171, October, 2005.

Berry, L. L. (1980), “Services marketing is different”, Business (May-June): 24-29

Burki, Abid A.; Hussain, Turab S.M (2007) “Opportunities and risks of liberalizing trade in services in Pakistan”

Burki, Shahid Javed (2007) “Growth, inequality and poverty” Changing Perceptions and Altered Reality: Pakistan’s Economy Under Musharraf, 1999-2006, Oxford University Press 2007.

Dutta, Dilip and Ahmed, Nasiruddin (2006) “Trade Liberalization and Industrial Growth in Pakistan: A Co-integration Analysis”, Center for South Asian Studies, School of Economics and Political Science, The University of Sydney, NSW 2006, Australia. Email:[e-mail]

Findlay, Christopher (2001) “Services Sector Reforms and Development Strategies: Issues and Research Priorities”, Policy issues in International Trade and Commodities, United Nations Conference on Trade and Development, Study Series no. 8.

Haque, Nadeem ul (2006) “Awake the sleeper within: Releasing the energy of stifled domestic commerce”, MPRA Paper no. 2141, posted 07 November, 2007.

Herani, Gobind M.; Wasim, Pervez; Rajar, Allah Wasayo; Shaikh, Riaz Ahmad (2008) “The nature of poverty and its prospects: Pakistan Evidence” MPRA Paper no 8318, posted 18 April, 2008.

Hussain, Ishrat (2000) “Growth and structural change in the Pakistan economy”, Pakistan: The Economy of an Elitist State, Oxford University Press, 2000.

Khan Ashfaque H. and Yun-Hwan Kim (1999) “Foreign Direct Investment in Pakistan: Policy issues and Operational Implications” EDRC Report Series, Economics and Development Resource Center, Asian Development Bank, EDRC Report No. 66, 1999.

Kojima, Makoto (2007) “Prospects and conditions for long-run economic growth in India”, JEF-Chatham House Roundtable Meeting, March 2007.

Lall, Sanjay (2005) “Benchmarking Pakistan’s competitive performance” presentation made on Asian Development Bank Institute, working paper, 2005.

MTDF 2005-10 (2004) “Medium term development framework 2005-10” Report of Working Group on Services for MTDF, 2005-10, Planning Commission of Pakistan, September, 2004.

Nath, Shri Kamal (2007) “Address by Minister of Commerce and Industry, Government of India” at the release of the annual supplement to the foreign trade policy 2004- 2009, New Delhi, April 19, 2007.

Paci, Pierella (2007) “Does Employment Really Matter for Shared Growth”, Employment and Gender in the Shared-Growth Agenda, April, 2007, World Bank.

Porter, Michael E., (1990), The Competitive Strategy, Harvard Business Press, 1990.

Rathmell, J. M. (1966) “What is meant by services?” Journal of Marketing, volume 30, October, 32-36, 1966.

Shostack, G.L (1977) “Breaking free from product marketing” Journal of Marketing, volume 41, 73-80, April 1977.

Siddiqui, Sulaman H.; Waheed Asghar (2008) “Linking Training with Productivity and Competitive Strategy: Implications of Value Chain Model for Strategically Effective Training Programs”, International Review of Business Research Papers, Volume 4, No. 1, January 2008.

Singh, Nirvikar (2006) “Services-led industrialization in India: Assessment and Lessons”, MPRA paper no. 1276, posted 07 November, 2007.

Sudha, Menon (2007) “Asia’s economic growth: trends and patterns”, Munich Personal RePEc Archive, MPRA paper no. 2464, posted 07 November, 2007.