Internationally linked firms and productivity in Pakistan: a look at the top end of the distribution

Lovo, S. ORCID: https://orcid.org/0000-0001-6231-4142 and Varela, G. (2022) Internationally linked firms and productivity in Pakistan: a look at the top end of the distribution. Journal of Development Studies, 58 (10). pp. 2110-2131. ISSN 0022-0388 doi: 10.1080/00220388.2022.2096442

Abstract/Summary

This paper examines productivity drivers for Pakistani publicly listed firms over 2012–17, with a focus on policy and outcome measures of integration in upstream sectors. We find that increased import duties on intermediates, and reduced FDI in upstream services, are associated with reduction in productivities downstream. Gains from lower input tariffs accrue to firms that cannot secure duty exemptions — domestic-oriented firms and smaller exporters. Gains from upstream services FDI accrue mostly to firms that are further from the productivity frontier. Our results suggest that productivity growth in Pakistan would benefit from increased exposure of upstream sectors to global markets.