DefinePK

Abstract

The broad aim of this paper is to find-out the contribution of Total FactorProductivity (TFP) to economic growth of Pakistan in the presence of humancapital and check its sensitivity to share of capital, proxies for human capitaland length of period. The study used Growth Accounting Method for thispurpose. The study is of a different nature in sense that it has used threedifferent proxies for human capital and the calculations of TFP have beenmade by using different shares of labour and capital. The results show thatTFP contributed 38.47% to Gross Domestic Product (GDP) per capita inPakistan during the period 1971-2008, with education as measure of humancapital. The contribution of TFP to GDP per Capita increases irrespective ofmeasure of human capital when minimum share of capital is used. It increasesto 46.72%, 57.08% and 24.14 % in case of education, health and Research &Development (R&D) respectively. However, in case of maximum share ofcapital, the TFP becomes 20.99%, 27.80% and 6.3% with education, healthand R&D as a measure of human capital. The study suggests TFP to be animportant determinant of economic growth in Pakistan, hence, thedeterminants of TFP needs to be explored to attain sustained economic growth.