Employment Aspects of Industrial Growth: A Correction

Meekal Ahmed

Abstract


In the Summer 1974 edition of the Pakistan Development Review,
Mr. Ishrat Hussain wrote an article on an aspect of Pakistan's
industrialization that has aroused considerable interest and concern in
other developing countries— the impact of technology and wage rate
changes on the growth of industrial employment [2,3 & 6]. While
commending Mr. Hussain's efforts in having drawn attention to this
aspect of our industrial strategy, it appears necessary to point out
that his analysis contains an important error in the basic data. This
note therefore is intended to correct the error in the data, rework the
entire analysis, and suggest reasons why the conclusions drawn by Mr.
Hussain are not warranted by the evidence he presents. The principal
error committed by Mr. Hussain was his failure to add the relevant
variables for Karachi to the West Pakistan data in the Census of
1959-60.1 For example, Table III of his article shows West Pakistan's
fixed capital stock for All Industry as Rs. 918 million.1 This is, of
course, incorrect. West Pakistan's capital stock in 1959-60 was Rs. 952
million+Rs. 490 million (Karachi)=Rs. 1,442 million; and a similar
correction factor applies to all other variables derived from the Census
of that year. As it turns out, these corrections result in sufficiently
large differences in the estimates of the Labour Displacement Effect and
the regression equation of changes in labour produc¬tivity on changes in
wage rates and net output. A re-examination of his empirical results
therefore seems warranted.

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DOI: https://doi.org/10.30541/v14i1pp.142-145

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