IMPACT OF TRADE LIBERALIZATION AND DOMESTIC ECONOMIC REFORMS ON TECHNICAL EFFICIENCY OF AGRO-BASED INDUSTRIES IN PAKISTAN

Pakistan introduced a package of economic reforms consisting of liberalization, deregulation and privatization policies. The main focus of these reforms was on achieving macroeconomic stability and a reasonable rate of economic growth. Manufacturing sector is an important sector of the economy of Pakistan and contributes about 25% share in GDP. Agro-based industries have a special importance in Pakistan because these industries are the main source of foreign exchange earnings and employment. Presently these industries operate under imperfect market conditions and have high levels of inefficiency. The development of these industries is closely linked with the overall development of the country. The spillover effects are assumed to be very large for other industries in general and the agricultural sector in particular. The purpose of this paper is to evaluate the impact of trade related domestic reforms and openness on technical efficiency of the agro-based industries. Our analysis shows a favorable impact of trade related reforms on the efficiency level of agro-based industries.