Employment Creation Effects of Pakistan's Exports
DOI:
https://doi.org/10.30541/v30i4%20IIpp.865-877Abstract
During the past two decades, an increasing number of developing countries have sought to pursue export -oriented trade and industrial policies as against the import -substitution strategy of industrialization.1 It has been argued that production for the world market not only restores the momentum of industrial growth but it leads to efficient resource allocation, greater capacity utilization, permits the exploitation of economies of scale, generates technological improvement in response to competition abroad and, most importantly, creates productive employment opportunities for a labour-surplus country [Balassa (1978), p. 180). This paper is not concerned with the merits or otherwise of export -oriented trade and industrialization policies rather we concentrate on the most important contribution of outward looking or export-oriented policy, i.e., its employment creation effects. It has been argued that an increased level of activity in the export sector gives rise to dynamic external economies of scale besides having its own direct effect. For example, an increase in exports creates jobs for workers directly engaged in the production of the export commodities. This being the direct effect, an increase in exports also creates employment via the linkage effect, multiplier effect and foreign exchange effect.2 A large number of studies over the last two decades have attempted to measure the direct and indirect contributions of exports in employment creation in developing countries.3 Almost all studies have used static input-output analysis to quantify the contribution of exports in employment generation.