Pakistan’s Experience with Manufacturing of Components for Consumer Durables

The experience of developed countries suggests that the capital goods industries are transmitters of technological change and are instrumental in diffusing innovations throughout the economy. Pakistan’s manufacturing industries have largely been confined to consumer goods industries, such as food and textiles, which require simple technology. Industries such as machinery, automobiles, consumer durables and basic chemicals which require sophisticated technology were virtually nonexistent till the Seventies. However, output of machinery, automobiles and consumer durables registered a sharp increase during the Eighties. Capital goods industries may be initiated/promoted through any of three routes: evolutionary, policy induced and vehicle assembly. The evolutionary method to initiate capital goods production is through the formation of skilled manpower through a gradual process starting with repairs and maintenance. The policy induced method of developing the capital goods industries takes the form of creating skilled manpower through deliberate government policy. The vehicle assembly based capital goods production minimises initial skill requirements but helps in developing the skills by creating demand for components and, hence, for the skilled manpower through on-the-job-training.