Total factor Productivity and its Contribution to Economic Growth of Pakistan

Abstract

This research discusses the importance of total factor productivity i.e. employed labor force, stock of capital and energy consumption that plays an important role in accelerating output growth for Pakistan’s economy. The results shows, that Pakistan productivity performance is not improving and now it is high time for Pakistan to shift its focus on investments in (R&D) activities. Results do not support that GDP growth in Pakistan has been motivated by increased use of labor and capital only. And the major factor contributing to low TFP growth has been the low and decreasing levels of saving and investments in the economy. Thus it is important to shift from traditional ways of production and move towards the modern techniques of accelerating output for the economy.