Lahore School of Economics

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Barriers to Growth of Small Firms in Pakistan: A Qualitative Assessment of Selected Light Engineering Industries

Dr. Syed M. Turab Hussain, Lahore University of Management Sciences
(Paper co-authored with Nazish Afraz and Usman Khan)

This report explores the impediments faced by the Small and Medium Enterprise (SME) sector in Pakistan. Within SME we select the Light Engineering sector, in particular the fan and sports goods industry. Using detailed stakeholder interviews, we find that the fan industry appears to be stuck in a trap of low profitability, poor quality production and an inability to access international markets. This cycle is perpetuated by low levels of trust and poorly functioning credit markets. The sports good industry, on the other hand, is outward oriented and most firms export their products. In this sector, firm growth is constrained by the degree of product diversification and innovation, which depends largely on whether or not a firm is a direct supplier to a major brand. The methodology of detailed qualitative research allows us to probe into the various inter-linkages and causal relationships amongst these and other constraints, and also allows us to capture a time dimension in the growth experience of firms in the industry. Both are important contributions to the prior research that has been based on large scale quantitative data, and allow us to make better informed policy recommendations.

About the presenter:

Dr. Syed Turab Hussain is an Associate Professor and Acting Chair of the Economics Department at the Lahore University of Management Sciences. Dr. Hussain did his Masters and PhD from the University of Essex in 2003. He has taught a variety of courses in the undergraduate and graduate program in Economics at both LUMS and the University of Essex. His area of specialization and publication is in migration theory, trade and development and industrial policy. Dr. Hussain has also worked on government policy issues such as trade with India, industrial policy of Pakistan, dispute settlement under WTO and services trade negotiation strategy under WTO.

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posted by S A J Shirazi @ 3/27/2014 10:55:00 AM,

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