scholarly journals Explaining Pakistan’s Premature Deindustrialization

2016 ◽  
Vol 21 (Special Edition) ◽  
pp. 351-368
Author(s):  
Nazia Nazeer ◽  
Rajah Rasiah
Keyword(s):  
Exchange Rate ◽  
Industrial Policy ◽  
Manufacturing Sector ◽  
Import Substitution ◽  
Strong Growth ◽  
Catch Up ◽  
The 1950S ◽  
Manufacturing Growth

Recognizing that Pakistan faces premature deindustrialization, this paper seeks to explain the phenomenon. The country experienced wild swings in industrialization during the 1950s and 1960s. The period 2001–10 was characterized by fairly strong growth, followed by contractions in other periods. Pakistan’s manufacturing sector is dominated by clothing and textiles exports. Periods of manufacturing growth were associated with pro-manufacturing and import substitution policies, while slumps were characterized by deregulation and a relatively high exchange rate. The evidence shows that the relative stagnation of manufacturing (regardless of the policies implemented) can be explained by the lack of a dynamic industrial policy targeting technological catch-up and leapfrogging. Moreover, where rents were distributed in the form of incentives, there was no emphasis on monitoring and appraisal.

scholarly journals Growth and Structural Change in Pakistan Manufacturing Industry, 1954-1964

1965 ◽  
Vol 5 (1) ◽  
pp. 94-139 ◽  
Author(s):  
Stephen R. Lewis, Jr. ◽  
Ronald Soligo
Keyword(s):  
Large Scale ◽  
Manufacturing Industry ◽  
Manufacturing Sector ◽  
Import Substitution ◽  
Empirical Work ◽  
Point Of View ◽  
Industrial Growth ◽  
Export Markets ◽  
Aggregate Growth ◽  
Manufacturing Growth

It has been evident for some time that Pakistan has enjoyed a rate of growth of its large-scale manufacturing sector that is indeed enviable. Some efforts have been made to study and understand this process both in terms of aggregate growth [20] and with reference to specific industries and policies [6]. In addition, a point of view has grown up in unofficial [21] and in official circles [16; 17; 18], that due to tariff and licensing policies, growth in manufacturing industry in Pakistan has proceeded via import substitution in light, consumer goods industries, that the possibilities for further growth in these directions are now extremely limited, that the export markets for such goods are small (due to a variety of reasons) and that future growth must take place via import substitution in intermediate goods and primarily in capital goods industries. As yet, little empirical work has been done to examine the various parts of this point of view. The purposes of the present paper are twofold. First, we have made a few simple improvements in the data on industrial growth and have collected such data as are available on production, imports, and exports of manufactured goods at a somewhat disaggregated level. Second, we have made some simple analysis of the patterns of manufacturing growth and discussed a few relationships that seem to have influenced the direction of industrial expansion over the past decade. In the latter part of the paper, we have reexamined the generally accepted point of view about industrial growth.

The case for reindustrialisation in developing countries: towards the connection between the macroeconomic regime and the industrial policy in Brazil

2017 ◽  
Vol 42 (2) ◽  
pp. 355-381 ◽  
Author(s):  
André Nassif ◽  
Luiz Carlos Bresser-Pereira ◽  
Carmem Feijo
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Interest Rates ◽  
Industrial Policy ◽  
Service Sector ◽  
Manufacturing Sector ◽  
Labour Productivity ◽  
Policy Regimes ◽  
Labour Productivity Growth ◽  
Wage Rates

Abstract The majority of economic literature tends to discuss economic development issues by analysing the industrial policy and other long-term development policies separate from short-term macroeconomic policy. However, development strategies require a close coordination of the macroeconomic regime with the industrial policy. In addition to Brazil, our analytical discussion and normative implications can be addressed to other developing countries also facing premature deindustrialisation. We propose an analytical discussion of the phenomena of industrialisation, deindustrialisation and reindustrialisation, including a discussion on the connection between the macroeconomic regime and industrial policy, both oriented to reindustrialisation and catching up. The main point is that both policy regimes must be closely coordinated with each other. Concerning the macroeconomic regime, we argue that consistent monetary, fiscal, wage and exchange rate policies are those which are able to not only keep price stabilisation, but also provide average real interest rates below the average real return rates on capital, a competitive real exchange rate and real wage rates increasing in accordance with labour productivity growth. As for industrial policy, theoretical and empirical evidence suggest strategies aimed at the diversification of production, processes and products, especially within the manufacturing sector and within tradable segments of the service sector.

scholarly journals Pakistan: A Case of Premature Deindustrialization?

2015 ◽  
Vol 20 (Sspecial Edition) ◽  
pp. 107-141
Author(s):  
Naved Hamid ◽  
Maha Khan
Keyword(s):  
Industrial Structure ◽  
Manufacturing Sector ◽  
Developed Countries ◽  
Manufacturing Industries ◽  
Advanced Economies ◽  
Recent Trends ◽  
Catch Up ◽  
Manufacturing Growth ◽  
Technology Industries ◽  
High Technology Industries

While “deindustrialization” is now considered normal for developed countries, recent trends show that many developing countries have seen their share of manufacturing employment peak at far earlier levels of income than in advanced countries. This new occurrence, which blocks off the main avenue for a country to catch up with more advanced economies, has been called “premature deindustrialization.” As a result of stagnation in manufacturing since 2007, Pakistan is on the brink – if not already in the process – of premature deindustrialization. This paper focuses on (i) growth trends in manufacturing and the economy, (ii) developments in the context of premature deindustrialization in Pakistan, and (iii) the change in the country’s structure of industry. We adapt and apply the industrial sophistication index developed by Lall, Weiss, and Zhang (2005) to the Pakistan Standard Industrial Classifications in the Census of Manufacturing Industries. The structure of industry in Pakistan, Sindh, and Punjab is mapped from 1990–99 to 2005/06 (2010/11 for Punjab) on the basis of a sophistication index score. Our analysis substantiates the conclusion that Pakistan’s industrial structure has stagnated, drawing on analyses of export data in other studies. It also indicates that our finding of modest upgrading in the industry sector on the basis of an intuitive division of industries into low-technology and high-technology industries may have been too optimistic. Revitalizing manufacturing growth will require Pakistan to once again adopt a proactive industrial policy to address the constraints and weaknesses of the manufacturing sector.

Successes and Failures of Industrial Policy in Transition Economies of Europe and Asia

2020 ◽  
pp. 778-810
Author(s):  
Vladimir Popov
Keyword(s):  
Exchange Rate ◽  
Soviet Union ◽  
Industrial Policy ◽  
Former Soviet Union ◽  
Import Substitution ◽  
High Energy ◽  
Dutch Disease ◽  
Energy Prices ◽  
Very High Energy ◽  
The Exchange Rate

This chapter discusses the achievements and failures of various models of industrial policy in post-communist countries. If industrial policy is needed, how are industries that have to be supported to be selected? What are the appropriate tools/instruments to support particular industries? Eastern European countries in general did not have any explicit industrial policy, either via tax concessions and/or subsidies, or via under/overpricing the exchange rate. Many countries of the former Soviet Union carried out large import-substitution programmes through the regulation of domestic fuel and energy prices (directly and via export tax) that subsidized all energy consumers. They also provided subsidies to agricultural enterprises. China and Vietnam (and to some extent Uzbekistan) carried out export-oriented industrial policy mostly by underpricing the exchange rate. It is argued that export-oriented industrial policy via undervaluation of the exchange rate is the best possible option to promote export-oriented catch-up development based on the export of manufactured goods. It is especially needed for resource-rich countries (Azerbaijan, Kazakhstan, Russia, Turkmenistan, Uzbekistan) that are prone to ‘Dutch disease’. Assistance to domestic producers by keeping domestic prices for fuel and energy low also helps to stimulate growth, but at the cost of very high energy intensity.

scholarly journals Theory at Odds with Best Practice: The Travails of Industrial Policy

2015 ◽  
Vol 20 (Sspecial Edition) ◽  
pp. 87-106
Author(s):  
Irfan ul Haque
Keyword(s):  
Industrial Policy ◽  
Policy Implication ◽  
Best Practice ◽  
Manufacturing Sector ◽  
Import Substitution ◽  
Developmental State ◽  
Current State ◽  
Rapid Industrialization ◽  
State Of Affairs

The problems that afflict Pakistan’s manufacturing sector are widely known. It is also recognized that the current state of affairs must change, but there is little agreement as to what that might entail. The lack of consensus on required actions and policies can be traced back to the end of the era of rapid industrialization in the late 1960s and subsequent withering away of the “developmental state” as Pakistan could then be characterized. The industry’s woes tend to be attributed to import substitution and high protection, with the policy implication that the country must further open up and liberalize. The paper questions this proposition and argues for a fresh approach to industrial policy, exploring what this might involve.

scholarly journals Industrial policy-making after COVID-19: Manufacturing, innovation and sustainability

2021 ◽  
pp. 103530462110147
Author(s):  
Mark Dean ◽  
Al Rainnie ◽  
Jim Stanford ◽  
Dan Nahum
Keyword(s):  
Recent Work ◽  
Industrial Policy ◽  
Industrial Revolution ◽  
Manufacturing Sector ◽  
The Future ◽  
Australian Economy ◽  
Industry Policy ◽  
Future Work ◽  
Policy Proposals ◽  
Recent Policy

This article critically analyses the opportunities for Australia to revitalise its strategically important manufacturing sector in the wake of the COVID-19 pandemic. It considers Australia’s industry policy options on the basis of both advances in the theory of industrial policy and recent policy proposals in the Australian context. It draws on recent work from The Australia Institute’s Centre for Future Work examining the prospects for Australian manufacturing renewal in a post-COVID-19 economy, together with other recent work in political economy, economic geography and labour process theory critically evaluating the Fourth Industrial Revolution (i4.0) and its implications for the Australian economy. The aim of the article is to contribute to and further develop the debate about the future of government intervention in manufacturing and industry policy in Australia. Crucially, the argument links the future development of Australian manufacturing with a focus on renewable energy. JEL Codes: L50; L52; L78; O10; O13: O25; O44; P18; Q42

scholarly journals An Exploratory Study of How Latecomers Transform Strategic Path in Catch-Up Cycle

2021 ◽  
Vol 13 (9) ◽  
pp. 4929
Author(s):  
Xiaoli Li ◽  
Hongqi Wang
Keyword(s):  
Technological Innovation ◽  
Industrial Policy ◽  
Emerging Economies ◽  
Evolutionary Process ◽  
Sustainable Growth ◽  
Rolling Stock ◽  
Innovation Capability ◽  
Firm Level ◽  
Industrial Leadership ◽  
Catch Up

In catch-up cycles, the industrial leadership of an incumbent is replaced by a latecomer. Latecomers from emerging economies compress time and skip amplitude by breaking the original strategic path and form a new appropriate strategic path to catch up with the incumbents. Previous studies have found that the original strategic path is difficult to break and difficult to transform. This paper proposes a firm-level framework and identifies the impetus and trigger factors for latecomers to transform the strategic path. The impetus is the mismatch between strategic mode and technological innovation capability. The trigger is the progressive industrial policy. Based on a Chinese rail transit equipment supplier’s (China Railway Rolling Stock Corporation; CRRC) catch-up process, this paper finds that the strategic path transformation is an evolutionary process from mismatch to rematch between strategic mode and technological innovation capability. With the implementation of industrial policy, the technological innovation capability will change. The original strategic mode does not match with changed technological innovation capability, which leads to performance pressure. With the adjustment of industrial policy, a new strategic mode adapted to new technological innovation capability emerges. This paper clarifies the source that determines successful catch-up practices for latecomers and contributes to latecomers’ sustainable growth in emerging economies.

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