Government Investment in Manufacturing: Stimulus or Hindrance to Pakistan's Private Sector?
Abstract
The cornerstone of the government's adjustment program is to increase the efficiency of private investment and activity by deregulating the economy and promoting competition. The counterpart of this fundamental strategy is the need to increase the effectiveness of the public sector, which in Pakistan had become overextended. To this end, public sector resources and management capacity are being redirected and concentrated in those areas in which public sector intervention is required because of market failures or social objectives. The results obtained strongly suggest that the government's program is supported by strong empirical evidence. There is no question that private investment has been discouraged by the public capital formation in manufacturing. Not only has government investment in this area stifled the private sector, but it also has diverted funds away from productive activities that would most likely have encouraged a follow-on expansion in private investment. Has the expansion of private investment in manufacturing increased the profitability of investment in other key sectors of the economy? And, if so, in which areas? Has government investment in manufacturing produced similar effects? Would a diversion of public investment funds from manufacturing to areas supporting private investment (energy, infrastructure) stimulate greater amounts of private investment, and if so, in which sectors?
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 1999
- Accession Number
- ADA521188
Entities
People
- Robert E. Looney
Organizations
- Naval Postgraduate School