Dynamics Shaking Total Factor Productivity in Manufacturing Sector of Pakistan: A Panel Data Analysis

Abstract

This research article investigates how explanatory variables are responsible for change in total factor productivity in manufacturing sector of Pakistan. Panel data of selected fifteen manufacturing firms of Pakistan from 2005 to 2013 are used to capture time and space affects. Considering data set of fifteen selected manufacturing firms consistently, it was found that explanatory variables (like size of firm, leverage, cash flows and Ownership) were responsible for changed in TFP growth. Empirical results suggest that explanatory variables appear to be most dominating factors in order to influence the TFP growth over a period of time and over a firm also. Research study further will provide a guide for Pakistan policy makers to set priorities to improve TFP growth for their manufacturing firms especially in Punjab.