Factor Price Distortions, Underutilisation of Capacity and Employment in the Large-Scale Manufacturing Sector of Pakistan

Kauser, Rukhsana (1994) Factor Price Distortions, Underutilisation of Capacity and Employment in the Large-Scale Manufacturing Sector of Pakistan. PhD thesis, University of Glasgow.

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Abstract

This study endeavours to consider ways of removing impediments to increased employment in the large-scale manufacturing sector of Pakistan. The analysis has been carried out mainly in terms of the technological aspect of employment. Factor price distortions and underutilisation of capital are seen as the two major factors affecting employment in the large-scale manufacturing sector of Pakistan. Various forms of government policies have been seen as a source of distortions in relative factor prices which in turn not only encouraged the use of capital-intensive techniques but also created excess capacity in the manufacturing sector. The effect of removing distortions in factor prices on employment depends on the magnitude of the elasticity of substitution. A statistically significant elasticity of substitution between capital and labour was found using the CES production function. The magnitude of the elasticity of substitution between capital and labour is found to be low in overall manufacturing sector but it varies in inter-industry estimates. Some industries show a great potential of increased employment opportunities with respect to real wage rate reductions. On the basis of our statistical results we reject the null hypothesis that factor prices do not play a substantial role in affecting choice of techniques in the large-scale manufacturing sector of Pakistan. Utilisation of capacity to its full maximum can increase employment opportunities in the sector. A large proportion of industries are not utilising their capacity to the full maximum. Our statistical results and the survey analysis support many hypotheses related to the causes of underutilisation of capacity in the large-scale manufacturing sector of Pakistan. We have found the shortage of electricity as one of the major factor affecting capacity utilisation. Overall, supply factors are dominant in affecting the rate of capacity utilisation in Pakistan.

Item Type: Thesis (PhD)
Qualification Level: Doctoral
Additional Information: Adviser: David Bell
Keywords: Economics, Commerce-Business, Labor economics
Date of Award: 1994
Depositing User: Enlighten Team
Unique ID: glathesis:1994-76434
Copyright: Copyright of this thesis is held by the author.
Date Deposited: 19 Nov 2019 14:20
Last Modified: 19 Nov 2019 14:20
URI: http://theses.gla.ac.uk/id/eprint/76434

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