EFFECTS OF ECONOMIC REFORMS AND OPENNESS ON STRUCTURE CONDUCT AND PERFORMANCE OF AGRO-BASED INDUSTRIES IN PAKISTAN
Saeed Ahmed Sheikh, Saeed Ahmed

Abstract
According to the latest Census of Manufacturing Industries (CMI: 2005-06) conducted by the Federal Bureau of Statistics (FBS), government of Pakistan; the share of agro-based industries in gross value added by the large-scale manufacturing sector is almost 52.0 percent. These industries have an important role in earning foreign exchange and creating jobs and are expected to play important role in the future development of the economy. Cotton, sugarcane, wheat and rice are the major crops of Pakistan and are the important source of raw material for the agro-based industries. The spillover effects of agro-based industries are expected to have important effects on other industries in general and the agricultural sector in particular. Agro-based industries have a large potential for growth and development because the natural endowment of the country (availability local raw material and cheap labor) is favorable. The agro-based industries in Pakistan operate under imperfect market conditions, earn monopoly profits; have high concentration ratios and these ratios have not changed much overtime. During mid 1990s Pakistan implemented various reforms to achieve macroeconomic stability including IMF supported structural adjustment program and trade liberalization policies under WTO regime. The main focus of this paper is to analyze the effects of trade related domestic reforms and the degree of openness on the structure, conduct and performance of agro-based industries in Pakistan. The study of structure, conduct and performance of these industries is important for policy prescription because if concentration leads to collusion then this suggests intervention and if concentration arises due to technological innovation then no intervention is needed. Census of Manufacturing Industries (CMI) data from 1996 to 2006 has been used for analyzing the effects of economic reforms and openness on structure, conduct and performance (SCP) of agro-based industries. Eleven agro-based industries of three digit level of industrial classification have been used for this purpose. Our analysis shows that domestic economic reforms and openness policies adopted under IMF and WTO regime in the mid 1990s have produced some favorable effects on structure, conduct and performance of agro-based industries.


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