Analysis of the large scale manufacturing growth of Pakistan

Abstract

The L.S.M (large-scale Manufacturing) industry is one of the three major components of economic growth of a country, the other two being Agriculture and Services. Through the course of time, Pakistan’s L.S.M industry has seen about its fair share of ups and downs but so far, no concrete study has been performed to study this sector. This thesis intends to investigate the behavior of the L.S.M industry of Pakistan for the time periods 2006-07 to 2020-21 and to put light on this sector’s future. The study highlights the factors (or variables) that are more significantly impacting the growth of the L.S.M industry in Pakistan, and secondly which statistical model best describes the relationship between the variables. For this study, time series data (setting the base year 2005-06) was collected from the online archives/repositories of the Pakistan Bureau of Statistics and State Bank of Pakistan. After stationarity checks and lag selection, the data was estimated using the O.L.S (ordinary least squares), A.R.I.M.A (autoregressive integrated moving average), V.E.C (vector error correction), V.A.R (vector autoregression) and S.V.A.R (structural vector autoregression) models. Next, we looked at the I.R.F (impulse response function) for the variables keeping L.S.M/QIM (quantum index of manufacturing)as the response, and lastly, the data was also forecasted for the next 36 months. This study can help policymakers as well as scientists in future planning r