An Analysis of Production Relations in the Large-scale Textile Manufacturing Sector of Pakistan

This paper attempts to determine econometrically the underlying production relations for the large-scale textile manufacturing sector of Pakistan, based on data available from the siX most recent censuses of large-scale manufacturing industries. The cOllariance model is used for pooling the provincial data. Testing for alternative forms reveals that the CES production function with constant-returns-to-scale most adequately explains the underlying production structure. The estimates of the elasticity of substitution are significantly different from zero in all cases, implying significant and efficient employment generation possibilities.