Output, Value Added and Employment in the Small Scale Textile Industry

The small scale manufacturing sector is in many ways the step-child of Pakistan’s national income accounts. A number of sample surveys of the output and employment characteristics of small industries have been conducted, but no attempt has been made to apply these surveys, in a systematic fashion, to the measurement of the growth of output of this sector. In the absence of better information, compilers of Pakistan’s national accounts simply assume that the small scale sector’s contribution to the national product grows at the same rate as the population. However, given the rapid structural changes in large scale industry and the sharp fluctuations in the past decade in the rate of increase in the gross national product, it is unlikely that the small scale sector grew at such a uniform rate. The small scale manufacturing sector encompasses a wide array of highly differentiated economic activities and separate estimates of the value added annually by each of these activities is not feasible, in large part because the establishments in this sector rarely keep systematic records even for major items such as sales or employment. Even if firms kept records, it would be extremely difficult to monitor the thousands of existing establishments, much less keep track of firms leaving or entering the sector. Thus, any effort at sampling or regular census-taking in the small scale sector is likely to provide insufficient information from which to construct an annual index of production.