Manufacturing in decline.

• Position: Pakistan's manufacturing

For the economic growth and development, the economists revealed that the manufacturing has been considered as the main engine. They have said that productivity is higher in the manufacturing sector than in the agricultural sector. Manufacturing is also assumed to have more potential for productivity growth than other sectors. The transfer of resources from low productivity sectors like traditional agriculture or informal services to high productivity and dynamic sectors like manufacturing (i.e., industrialization) offers a structural change bonus. This is a temporary effect on the growth rate, i.e. it lasts as long as the share of manufacturing is growing. Similarly, the transfer of resources from manufacturing to services may offer a structural change burden if many service activities indeed have little potential for productivity rise.

Furthermore, it also plays a vital role in economic development of Pakistan. According to the Ministry of Finance, the contribution of manufacturing in Pakistan's GDP is hovering approximately the 13.5-13.8 percent for almost decade, while for the FY2019 it declined to 13.0 percent. The performance of major crops, power slippages, global commodity price shocks, and contraction in demand of domestic consumer goods hindered the growth of manufacturing sector. Statistics also showed that the Large Scale Manufacturing (LSM) in Pakistan has 78 percent share in manufacturing and 10.2 percent in GDP whereas Small Scale Manufacturing accounts for 2.0 percent in GDP. LSM growth during July-March FY 2019 fell to 2.93 percent as against to 6.33 percent in the corresponding period last year. On Year-on-Year (YoY), LSM growth recorded sharp fall of 10.63 percent in March 2019 as against a rise of 4.70 percent in March 2018.

The Government of Pakistan plans high hopes on the industrial development. However, the industry in the country has not proven to be the driver of economic growth and higher productivity-oriented employment. The uneven economic growth patterns have had adverse impact on favorable outcomes for the growth of industry. Industry adds the highest value addition in the production processes, yet its share of total employment in Pakistan is lowest at around 20 percent. It is also said that the industrial development is critical to boost exports and to help plug the current account deficit. The fiscal year 2019 started with 7.4 percent growth mostly contributed by Electronics 95.6 percent, Non metallic...