Growth and Structural Change in Pakistan’s Manufacturing Industry: Reply

Gustav Papanck’s comments on changes in relative prices among manu¬factured goods are, indeed, important. As he notes, however, the correction to constant prices would not change the measure of the importance of import sub¬stitution in explaining the growth of any given industrial group1. Also, for the period 1954/55 to 1963/64, the contribution of import substitution to total growth in value added in consumer goods industries is only slightly greater than the con¬tribution of import substitution to growth in value added in all industries (21.0 per cent for consumer goods as opposed to 19.4 per cent for all industries). In¬creasing the weight of consumption goods industries to reflect changes in relative prices would increase the importance of import substitution in explaining growth in value added in all industries very slightly. For the period 1959/60 to 1963/64 when, according to Dr. Papanek’s data, the fall in the relative prices of con¬sumer goods was the greatest, increasing the weight of consumer goods indus¬tries would actually reduce the contribution of import substitution to growth in value added for all industries.