Pakistan KLEMS Database and Productivity Measurement at the Industry Level

This study aims at creating an internationally comparable Pakistan KLEMS data at the national and industry level on the pattern of EU KLEMS database. It will include growth in output, growth in inputs and derived measures of total factor productivity. Pakistan's economy has gone through some fundamental changes in the last few decades including changes in labour composition, growth in human capital, growth in capital input, energy shortages, nationalization and then privatization of sectors, trade liberalization, war against extremism and surge in oil prices. However, it is not clear what impacts these changes have had on the economy. It is also not clear how productivity growth in manufacturing, services, and agriculture sectors have impacted productivity growth at the aggregate level. This analysis has not been possible so far due to non-availability of consistent industry-level measures of inputs and outputs. Moreover, how industry growth compares with other countries is also hampered by lack of comparable data across countries. The KLEMS database constructs these series at a consistent level across countries for easier comparison. In this phase, database of 7 of the 31 industries will be generated for the period 1980 to 2010. The productivity estimates at the industry level will help in formulating policies that help revive productivity and competitiveness of the country. When this data is combined with other sources, it will help in evaluating various policies, e.g., tax policy, monetary policy, industrial policy, trade liberalization policy, among others.