Trends in Total Factor Productivity in Pakistan Agriculture Sector

Total factor productivity (TFP) has emerged as an important source of agriculture growth. However, this area remained neglected by researchers as well as policy makers in Pakistan. The studies which have estimated agriculture TFP growth in Pakistan are very few and they have tended to overstate it by ignoring the variation in capacity utilization, hours worked and improvement in labour productivity as a result of increased level of education and training. The present study has avoided this pitfall and has accurately measured TFP growth. According to this study, agriculture TFP in Pakistan has grown at an annual average rate of 0.28 percent which explains more than 7 percent of the growth of agriculture value added. The study recommends that TFP should be given proper attention by the government. Appropriate policy, such as diffusion of relevant information among the farmers, increased area under cultivation, and timely availability of fertilizer at affordable prices for the farmer, should be devised to accelerate TFP and value added growth in the agriculture sector of Pakistan.