<p>This study first calculates total factor productivity (TFP) in Pakistan from 1962 to 2025 and then disaggregates it into components using a growth accounting approach. We also examine the long-term relationship between TFP and economic growth using a vector autoregressive (VAR) model. The findings show that human and physical capital are the primary drivers of economic growth in Pakistan. A positive effect of TFP on economic growth is observed in the 1980s, 2010s, and 2020s. Empirical results indicate that labor, physical capital, R&amp;D, and political stability are key determinants of TFP growth in Pakistan. Additionally, the VAR model reveals a positive and significant long-term relationship between economic growth and TFP. After running diagnostic tests and confirming that the estimated VAR meets stability conditions, we project TFP and economic growth from 2026 to 2030. The average projected economic growth for this period is 3.90%, with physical capital (1.77%), human capital (1.35%), and labor (0.80%) identified as the primary sources. However, the higher-than-expected contributions from physical and human capital have resulted in an average TFP contribution of -0.02%. The study recommends increasing investment in physical and human capital, implementing education reforms and technology adoption, expanding R&amp;D, and maintaining political and macroeconomic stability as strategic measures to enhance TFP and support sustainable economic growth in Pakistan.</p>

错误:搜索内容不能为空,请输入英文关键词
错误:关键词超出字数限制,请精简
高级检索

Analyzing the Determinants of Total Factor Productivity Growth in Pakistan

  • Liaqat Ali

摘要

This study first calculates total factor productivity (TFP) in Pakistan from 1962 to 2025 and then disaggregates it into components using a growth accounting approach. We also examine the long-term relationship between TFP and economic growth using a vector autoregressive (VAR) model. The findings show that human and physical capital are the primary drivers of economic growth in Pakistan. A positive effect of TFP on economic growth is observed in the 1980s, 2010s, and 2020s. Empirical results indicate that labor, physical capital, R&D, and political stability are key determinants of TFP growth in Pakistan. Additionally, the VAR model reveals a positive and significant long-term relationship between economic growth and TFP. After running diagnostic tests and confirming that the estimated VAR meets stability conditions, we project TFP and economic growth from 2026 to 2030. The average projected economic growth for this period is 3.90%, with physical capital (1.77%), human capital (1.35%), and labor (0.80%) identified as the primary sources. However, the higher-than-expected contributions from physical and human capital have resulted in an average TFP contribution of -0.02%. The study recommends increasing investment in physical and human capital, implementing education reforms and technology adoption, expanding R&D, and maintaining political and macroeconomic stability as strategic measures to enhance TFP and support sustainable economic growth in Pakistan.