Lahore School of Economics

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Measuring Differences in Technology and Productivity in a Sample of Jeans Manufacturers in Pakistan
March 24, 2016

Theresa Chaudhry and Mahvish Faran, Lahore School of Economics

Textiles account for over half of Pakistan’s exports, with ready-made garments making up more than half of textile exports. Recently, there has been optimism about higher exports in the textile sector after the EU granted Pakistan GSP (Generalised Scheme of Preferences) Plus status. In order to increase the market share of ready-made garments in the European market, it is essential for developing countries, like Pakistan, to increase manufacturing productivity in order to achieve higher economic growth. At present, the readymade garments sector of Pakistan faces tough competition from other countries such as Bangladesh and China.

In our paper, we will focus our analysis on the denim garments sector which is a key export sector that has the potential to grow vertically (from weaving to finished garments). In particular, we will map the jeans’ production process and also calculate differences in productivity across firms at each stage of the production process. We will then see if the use of different types of technologies across firms in each stage of the production process can explain productivity differences across firms.

In order to measure to measure firm level productivity, the readymade garments sector uses the term ‘standard minute value’ (or SMVs) i.e. the time it takes for a qualified worker to complete one task. We plan to map and record the production process in each firm and then use this to calculate SMVs for each production step. After this we will add up the SMVs of all the operations and calculate the total time it takes to produce one garment. Since the readymade garments sector produces diverse products, it will difficult to compare productivity across non-homogenous products; therefore we will compare the SMV of a standardized product across three factories and this will require each firm to produce the same standardized product. We will then compare SMVs across firms.

Another aspect that the paper will cover is the technology that the firms employ to produce the same product. The questions that we want to address in the paper are whether there are significant variations in SMV across firms, and if there are, then can these variations be attributed to technology differences.

Bios

Dr. Theresa Chaudhry is Associate Professor of Economics and a fellow of the Centre for Research in Economics and Business (CREB) at the Lahore School of Economics. She received a BS in Foreign Service from Georgetown University in 1996, and a PhD in Economics from the University of Maryland, College Park in 2005. Her dissertation focused on the nature of inter-firm cooperation within clusters of small and medium-size enterprises in developing countries. This research included an empirical study of the contract enforcement environment in Pakistan, using data from a commissioned survey of the surgical goods industry based in Sialkot. Prior to teaching at the Lahore School, Dr. Chaudhry worked at the World Bank in Washington, D.C. on issues of public finance and public sector governance.

Dr. Chaudhry teaches microeconomics for the BSc Economics, MPhil Economics, and PhD Economics programs, and has supervised both BSc and MPhil theses. She also serves as an editor of the Lahore Journal of Economics, a bi-annual scholarly journal cited in the JEL. Her research interests are Micro-Development, Industrial organization, Experimental and behavioral economics and New Institutional Economics. Her current on-going projects include survey-based and experimental research in Punjab, Pakistan on i) consanguineous marriage, ii) firm-level productivity, iii) rural household finance, iv) conditional cash transfers for girls’ secondary schooling.

Mahvish Faran is currently a research fellow at the Lahore School of Economics. She is also managing the technology management centre that was set up at the Lahore School of Economics in May 2015. She has completed her MSc in Economics from the University of Warwick. Her research interests are Industrial Organization and Labour Economics.

Labels: Abstract, Annual Conference, CREB, Management of Pakistan Economy, Twelfth Annual Conference