TOTAL FACTOR PRODUCTIVITY IN PAKISTAN REVISITED:
A DUAL APPROACH OF PRODUCTIVITY MEASUREMENT
Sadia Majeed1
 , Qazi Masood Ahmed2
  and Muhammad Sabihuddin Butt
3
ABSTRACT
The novelty of the new theory of economic growth essentially lies in explaining the
growth of total factor productivity (TFP) - the efficiency in utilization of both capital
and human resources and degree of technological advancement associated with economic
growth. This paper presents the dual estimates of TFP growth for large scale manufacturing
(LSM) sector of Pakistan at disaggregate level (i.e. for consumer goods industries,
intermediate goods industries and capital goods industries). Most previous growth
accounting studies on Pakistan have followed the primal approach, which depends
heavily on the national income accounts. The dual approach, in contrast, allows
independent price information to play a role. We find that there are significant differences
between TFP series calculated using the two approaches (primal and dual approach).
We trace the reason for this difference to inconsistencies between the data on user cost
of capital and physical stocks of capital.
KEY WORDS: Total factor productivity, TFP, large scale manufacturing sector,
primal and dual TFP