Development of an electronic database of industrial and commercial activity and a spatial analysis of small and cottage industries in Punjab, Pakistan

Analysis of the spatial distribution of economic activity has significant importance for policy analysis in a country. In the case of the state of Punjab in Pakistan, the relevant statistics are only available in the manufacturing sector and these do not provide any sector specific details for the districts. Recognising the gap in access to such vital statistics, this project was designed to create an electronic database along with a spatial map at the census ward/ cluster level for the 2.9 million industrial and commercial units in the Punjab province (identified during the recent Census of Small and Cottage Industries (2011-13)). Another objective of the project is to empirically analyse the 132,000 small and cottage manufacturing units and recommend policy based interventions, for increased competitiveness at the enterprise and cluster level. This exercise will involve estimation of firm level total factor productivity (TFP) in each district of Punjab, segregation of internal and external drivers of productivity, and the creation of a spatial map indicating district-wise TFP levels.

This project will generate a unique, rich and unprecedented snapshot of economic activity in Punjab province, which accounts for more than 50 percent of Pakistan’s population. This snapshot will be presented spatially in a highly granular level, providing a rich array of information to policymakers. It is expected that the findings of this study will be helpful for the provincial Government in framing its industrialisation policy and the local governments in their land use and zoning policies.

The second objective of the project is to analyse existing regulations for cottage and small industries and clusters in Punjab. The key issues are to ensure that state sponsored support is extended to efficient enterprises only and lead towards sustainable growth of industry. The empirical analysis is designed to identify such systemic inefficiencies both within the enterprise and in the economic environment and thus lead towards better resources reallocation. A sectoral comparison of TFPs to segregate growing and surviving industries is also planned. This research proposal has been specifically discussed with the Punjab Small Industries Corporation (PSIC). It is also being proposed to PSIC that future surveys should be conducted while maintaining the firm identity so that a panel dataset is developed.

The mapping of economic activity, as well as the analysis of productivity will directly contribute to the development of the Government of Punjab’s industrial policy, where the Government is expected to seek critical input from IGC experts including members of the research team. The proposed follow on project on urban clusters will develop economic maps of major cities, starting with the provincial capital Lahore, to assist the Government of Punjab in developing its policy on urbanization and land use. It is learnt that the Government is soon initiating a project funded by the World Bank to develop a regional spatial plan for the province, for which this study can be a critical input.