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Abstract
This paper uses a unique sample of sports glove manufacturers from Sialkot to develop an index of technological sophistication. The data shows that total factor productivity (TFP) and total revenue productivity (TRP) cluster around their mean levels. The medium-tech and high-tech firms seem to have a higher TFP and LP than the low-tech firms. Another interesting result is that, across firms, the level of retained earnings has a negative impact on TFP and TRP.
Keywords: Technology, manufacturing, gloves, Sialkot, Pakistan.
JEL classification: L67, O14.
(ProQuest: ... denotes formulae omitted.)
1.Introduction
There is a rich body of literature that provides both empirical and theoretical evidence that firms' investment in technology is a key factor in rapid industrial growth (see Amsden & Chu, 2003; Lall & Urata, 2003; Mathews & Cho, 2007). The bulk of the empirical evidence finds that most firms in developing economies fail to invest in technology, which could not only fuel growth, but also lead to export diversification. In this paper, we focus on Pakistani-made sports gloves - a rapidly growing export sector.
There are several reasons for focusing on this sector: First, sports glove exports are growing rapidly and Pakistan is a major player in this market. Its exports of sports gloves increased by $25 million in 2013/14, while exports of other sports goods fell during this period. Second, the glove production process is relatively simple, which allows us to map it and to determine the technologies used in each step. Finally, given the small number of glove manufacturers in Sialkot, our sample of firms is fairly representative of the population.
In comparison to the literature, we focus on the level of technology adopted at each stage of the production process. We also attempt to measure the impact of technology adoption based on how technology is related to firm-level measures of productivity. Our main objective is to analyze whether productivity, firm size, management practices, financial constraints, research and development (R&D) and export destinations affect technology adoption at the firm level.
Figure 1 shows where Pakistani-made sports gloves are primarily exported. High-to-medium-quality gloves are exported largely to North America and Europe, while low-quality gloves are exported to Australia and Asian markets.
2.Literature Review
During the second half of the 20th century,...