Cost and Productivity Experiences of Pakistan with Aggregate Learning Curve
The principal focus of this study is on the
measurement and analysis of labor learnings in Pakistan. The study
at the aggregate economy level focus on the labor productivity
movements and at large-scale manufacturing level focus on the cost
structure, with isolating the contribution of the learning curve. The
analysis of S-shaped curve suggests that learnings are only below one
half of aggregate learning curve and other half shows the retardation
in learning, hence retardation in productivity movements. The study
implies the existence of learning economies in term of cost reduction
that is input cost per unit produced decreases by 0.51 percent every
time the cumulative production output doubles.
[1]. Besanko, D.; Dranove, D.; Shanery M. and Schaefer, S. Economics of
Strategy. Third Edition, John Wiley & Sons, Inc. 2004; 95-104.
[2]. Yelle, Louis E. "The learning curve: historical review and
comprehensive survey" Decision Sciences 1979;10; 302-328.
[3]. Wright, T. "Factors affecting the cost of airplanes" Journal of
Aeronautical Science 1936;3; 122-128.
[4]. Middleton, K. Wartime productivity changes in the airframe industry.
Monthly Labor Review 1945;61; 215-225.
[5]. Crawford, J. R. and E. Strauss. World War II acceleration of airframe
production. Air Material Command, Dayton, Ohio; 1947.
[6]. Carr, G. W. Peacetime cost estimation requires new learning curves.
Aviation 1946;45; 76-77.
[7]. Asher, Harold. "Cost-quantity relationships in the airframe industry.
Santa Monica: Calif RAND Corporation 1956; Report 291.
[8]. Renshaw F. Edward. A note on the aggregate learning curve and CEA
productivity goals. Growth and Change 1979;1; 10-15.
[9]. Roberts, C. Peter. A theory of the learning process. Journal of
Operational Research Society 1983;34; 71-79.
[10]. Thomas, Annie and Dutton, John M. Treating progress function as a
managerial opportunity. Academy of Management Review 1984;9; 235-
247.
[11]. Argote, L and Epple, D. "Learning curves in manufacturing" Science
1990;247; 920-924.
[12]. Conway, R. and A. Schultz. "The manufacturing progress function"
Journal of Industrial Engineering 1959;10; 39-53.
[13]. Hirsch, Werner Z. "Manufacturing progress functions" Review of
Economics and Statistics 1952;34; 143-155.
[14]. Sheshinski, Eytan. Tests of the learning by doing hypothesis. Review of
Economics and Statistics 1967;49; 568-578.
[15]. Becker, S. and N. Baloff. "Organization structure and complex problem
solving" Administrative Science Quarterly 1969;14; 260-271.
[16]. Abernathy, W. J. and N. Baloff. "A methodology for planning new
product start-ups" Decision Sciences 1973;4; 1-20.
[17]. Muth, F. John. Search theory and the manufacturing progress function.
Management Science 1986;32; 948-962.
[18]. Alchian, A. "Reliability of progress curves in air-frame production"
Econometrica 1963;31; 679-693.
[19]. Searle, A. D. and Goody, C. S. Productivity increases in selected
wartime shipbuilding programs. Monthly Labor Review 1945;61; 1132-
1147.
[20]. Adler, P. and Clark, K. Behind the learning curve: a sketch of the
learning process Boston: Harvard Business School, Harvard University;
1987.
[21]. Zimmerman, M. B. "Learning effects and the commercialization of new
energy technologies: the case of nuclear power" The Bell Journal of
Economics 1982;13; 297-310.
[22]. Joskow Paul L. and Nancy L. Rose. "The effect of technological change,
experience, and environmental regulation on the construction cost of
coal-burning generating units" Rand Journal of Economics 1985;16; 1-
27.
[23]. Argote L., S. L. Beckman, D. Epple "The persistence and transfer of
learning in industrial setting" Management Science 1990;36; 140-154.
[24]. Battese, G. E. and S. J. Malik. "Estimation of elasticities of substitution
for CES production function using data on selected manufacturing
industries in Pakistan" The Pakistan Development Review 1987a;26;
161-177.
[25]. Battese, G. E. and S. J. Malik. "Estimation of elasticities of substitution
for CES and VES production function using firm-level data for food
processing industries in Pakistan" The Pakistan Development Review
1988b;27; 59-71.
[26]. Battese, G. E. and S. J. Malik and N. Sultana. "Capital labour
substitution large scale food processing industries in Pakistan: Some
Recent Evidence" The Pakistan Development Review 1993;32; 847-57.
[27]. Kazi, S., Z. S. Khan and S. A. Khan "Production relations in Pakistan-s
manufacturing" The Pakistan Development Review 1976;15; 406-423.
[28]. Kazmi, N. "Substitution elasticities in small and household
manufacturing industries in Pakistan". PIDE: Islamabad 1981; Research
Report Series, No.122.
[29]. Kemal, A. R. "An analysis of industrial efficiency in Pakistan 1959-60
to 1969-70". Ph.D. Thesis, University of Manchester, Manchester:
1978a.
[30]. Kemal, A. R. "Substitution elasticities in the large-scale manufacturing
industries in Pakistan" The Pakistan Development Review 1981b;20; 1-
36.
[31]. Khan, A. H. "The two-level CES production function for the
manufacturing sector of Pakistan" The Pakistan Development Review
1989;28; 1-12.
[32]. Khan, A. E. and M. Rafiq. "Substitution among labour, capital, imported
raw materials, and bank credit in Pakistan-s manufacturing" The
Pakistan Development Review 1993;32; 1259-1266.
[33]. Zahid, S. N., M. Akbar, and S. Jaffry A. "Technical change, efficiency,
and capital-labour substitution in Pakistan-s large-scale manufacturing
sector" The Pakistan Development Review 1992;31; 165-88.
[34]. Burki, A. A., M. A. Khan, and B. Bratsberg "Parametric tests of
allocative efficiency in the manufacturing sectors of India and Pakistan"
Applied Economics 1997;29; 155-169.
[35]. Mahmood, Z. "Derived demand for factors in the large-scale
manufacturing sector of Pakistan" The Pakistan Development Review
1989;28; 731-742.
[36]. Mahmood, Z. "Factor price shocks, factor substitution and their
implications for policy" International Economic Journal 1992;6; 63-73.
[37]. Chishti, S., and F. Mahmud. "Energy substitution in Pakistan-s
manufacturing sector" Pakistan Economic and Social Review 1988;26;
17-64.
[38]. Chishti, S., and F. Mahmud. "The energy demand in the industrial sector
of Pakistan" The Pakistan Development Review 1991;30; 83-88.
[39]. Ahmad, Eatzaz and Idress M. "The time profile of the cost structure in
Pakistan-s manufacturing sector" The Pakistan Development Review
1999;38; 1101-1116.
[40]. Wizarat, Shahida. Sources of growth in Pakistan-s large-scale
manufacturing sector. Applied Economics Research Centre, University
of Karachi, 1987; Discussion Paper No. 88.
[41]. Wizarat, Shahida. Inter-Industry productivity differentials in Pakistan-s
large-scale manufacturing sector. The Singapore Economic Review
1988; XXXIII;2; 49-65.
[42]. Ahmed, Meekal Aziz "Productivity, prices and relative income shares in
Pakistan-s large-scale manufacturing". D.Phil. Thesis, University of
Oxford, Oxford; 1980.
[43]. Wizarat, Shahida and Rashid, Shahnaz. The productivity trends in
Pakistan-s manufacturing: 1955-81. Pakistan Journal of Applied
Economics 1988;7; 109-119.
[44]. Cheema, Aftab Ahmed. "Productivity trends in the manufacturing
industries" The Pakistan Development Review 1978;17; 44-65.
[45]. Mahmood, Zafar and Siddiqui, Rehana. State of technology and
productivity in Pakistan-s manufacturing industries: some strategic
directions to build technological competence. The Pakistan Development
Review 2000;39; 1-21.
[46]. Khan, Mahmoodul Hassan and Burki, Abid A. "Estimation allocative
efficiency and elasticities of substitution in the large-scale
manufacturing sector of Pakistan. Pakistan" Journal of Applied
Economics 2000;16; 49-63.
[47]. Wizarat, Shahida. The rise and fall of industrial productivity in Pakistan
Oxford University Press: 2003.
[48]. Tan, Hong and Lopez, Gladys Acevedo. Mexico: in firm training for
knowledge economy. The World Bank Policy Research 2003; Working
Paper Series No. 2957.
[49]. Barron, John M; Berger, Mark C and Black, Dan A. "Do workers pay for
on-the-job training? Journal of Human Resources 1999;34; 235-252.
[50]. Todaro, Michael P. Wages, industrial employment and labour
productivity: the Kenyan experience. Eastern Africa Economic Review
1969;1; 29-46.
[51]. Kilby, Peter. "Organization and productivity in backward economies"
Quarterly Journal of Economics 1962;76; 303-310.
[52]. Pack, H. The substitution of labour for capital in Kenyan manufacturing.
The Economics Journal 1976;86; 45-58.
[53]. Arrow, Kenneth J. "The economic implications of learning by doing"
Review of Economic Studies 1962;29; 155-173.
[54]. Rosen, Sherwin. Learning by experience as joint production. Quarterly
Journal of Economics 1972;86; 366-382.
[55]. Khan, Shahrukh R; Shaw, W Douglass; Hussain, Fazal. "Causality
between literacy and labor productivity in Pakistan" Economics of
Education Review 1991;10; 245-251.
[56]. Thurstone, L. L. The learning function. Journal of General Psychology
1930;3; 469-93.
[57]. Merrell, Margaret. The relationship of individual growth to average
growth. Human Biology 1931;3; 37-70.
[58]. Rapoport, Anatol. A derivation of a rote learning curve from the total
uncertainty of a task. Bulletin of Mathematical Biology 1960;22; 85-97
[59]. Estes, W. K. "Toward a statistical theory of learning" Psychological
Review 1950;57; 94-107.
[60]. Anzai Y., H. Simon "The theory of learning by doing" Psychological
Review 1979;86; 124-140.
[61]. Hayes, KJ. "The backward curve: a method for the study of learning"
Psychological Review 1953;60; 269-275.
[62]. Rowthorn, R. The Thatcher Revolution. Economic Paper 1989;2; 1-22.
[63]. Burgess, John (1990) "Another Productivity Paradox? The Accord and
Recent Productivity Tends in Australian Manufacturing" Working Paper
No. 3, ACIRRT, The University of Sydney.
[1]. Besanko, D.; Dranove, D.; Shanery M. and Schaefer, S. Economics of
Strategy. Third Edition, John Wiley & Sons, Inc. 2004; 95-104.
[2]. Yelle, Louis E. "The learning curve: historical review and
comprehensive survey" Decision Sciences 1979;10; 302-328.
[3]. Wright, T. "Factors affecting the cost of airplanes" Journal of
Aeronautical Science 1936;3; 122-128.
[4]. Middleton, K. Wartime productivity changes in the airframe industry.
Monthly Labor Review 1945;61; 215-225.
[5]. Crawford, J. R. and E. Strauss. World War II acceleration of airframe
production. Air Material Command, Dayton, Ohio; 1947.
[6]. Carr, G. W. Peacetime cost estimation requires new learning curves.
Aviation 1946;45; 76-77.
[7]. Asher, Harold. "Cost-quantity relationships in the airframe industry.
Santa Monica: Calif RAND Corporation 1956; Report 291.
[8]. Renshaw F. Edward. A note on the aggregate learning curve and CEA
productivity goals. Growth and Change 1979;1; 10-15.
[9]. Roberts, C. Peter. A theory of the learning process. Journal of
Operational Research Society 1983;34; 71-79.
[10]. Thomas, Annie and Dutton, John M. Treating progress function as a
managerial opportunity. Academy of Management Review 1984;9; 235-
247.
[11]. Argote, L and Epple, D. "Learning curves in manufacturing" Science
1990;247; 920-924.
[12]. Conway, R. and A. Schultz. "The manufacturing progress function"
Journal of Industrial Engineering 1959;10; 39-53.
[13]. Hirsch, Werner Z. "Manufacturing progress functions" Review of
Economics and Statistics 1952;34; 143-155.
[14]. Sheshinski, Eytan. Tests of the learning by doing hypothesis. Review of
Economics and Statistics 1967;49; 568-578.
[15]. Becker, S. and N. Baloff. "Organization structure and complex problem
solving" Administrative Science Quarterly 1969;14; 260-271.
[16]. Abernathy, W. J. and N. Baloff. "A methodology for planning new
product start-ups" Decision Sciences 1973;4; 1-20.
[17]. Muth, F. John. Search theory and the manufacturing progress function.
Management Science 1986;32; 948-962.
[18]. Alchian, A. "Reliability of progress curves in air-frame production"
Econometrica 1963;31; 679-693.
[19]. Searle, A. D. and Goody, C. S. Productivity increases in selected
wartime shipbuilding programs. Monthly Labor Review 1945;61; 1132-
1147.
[20]. Adler, P. and Clark, K. Behind the learning curve: a sketch of the
learning process Boston: Harvard Business School, Harvard University;
1987.
[21]. Zimmerman, M. B. "Learning effects and the commercialization of new
energy technologies: the case of nuclear power" The Bell Journal of
Economics 1982;13; 297-310.
[22]. Joskow Paul L. and Nancy L. Rose. "The effect of technological change,
experience, and environmental regulation on the construction cost of
coal-burning generating units" Rand Journal of Economics 1985;16; 1-
27.
[23]. Argote L., S. L. Beckman, D. Epple "The persistence and transfer of
learning in industrial setting" Management Science 1990;36; 140-154.
[24]. Battese, G. E. and S. J. Malik. "Estimation of elasticities of substitution
for CES production function using data on selected manufacturing
industries in Pakistan" The Pakistan Development Review 1987a;26;
161-177.
[25]. Battese, G. E. and S. J. Malik. "Estimation of elasticities of substitution
for CES and VES production function using firm-level data for food
processing industries in Pakistan" The Pakistan Development Review
1988b;27; 59-71.
[26]. Battese, G. E. and S. J. Malik and N. Sultana. "Capital labour
substitution large scale food processing industries in Pakistan: Some
Recent Evidence" The Pakistan Development Review 1993;32; 847-57.
[27]. Kazi, S., Z. S. Khan and S. A. Khan "Production relations in Pakistan-s
manufacturing" The Pakistan Development Review 1976;15; 406-423.
[28]. Kazmi, N. "Substitution elasticities in small and household
manufacturing industries in Pakistan". PIDE: Islamabad 1981; Research
Report Series, No.122.
[29]. Kemal, A. R. "An analysis of industrial efficiency in Pakistan 1959-60
to 1969-70". Ph.D. Thesis, University of Manchester, Manchester:
1978a.
[30]. Kemal, A. R. "Substitution elasticities in the large-scale manufacturing
industries in Pakistan" The Pakistan Development Review 1981b;20; 1-
36.
[31]. Khan, A. H. "The two-level CES production function for the
manufacturing sector of Pakistan" The Pakistan Development Review
1989;28; 1-12.
[32]. Khan, A. E. and M. Rafiq. "Substitution among labour, capital, imported
raw materials, and bank credit in Pakistan-s manufacturing" The
Pakistan Development Review 1993;32; 1259-1266.
[33]. Zahid, S. N., M. Akbar, and S. Jaffry A. "Technical change, efficiency,
and capital-labour substitution in Pakistan-s large-scale manufacturing
sector" The Pakistan Development Review 1992;31; 165-88.
[34]. Burki, A. A., M. A. Khan, and B. Bratsberg "Parametric tests of
allocative efficiency in the manufacturing sectors of India and Pakistan"
Applied Economics 1997;29; 155-169.
[35]. Mahmood, Z. "Derived demand for factors in the large-scale
manufacturing sector of Pakistan" The Pakistan Development Review
1989;28; 731-742.
[36]. Mahmood, Z. "Factor price shocks, factor substitution and their
implications for policy" International Economic Journal 1992;6; 63-73.
[37]. Chishti, S., and F. Mahmud. "Energy substitution in Pakistan-s
manufacturing sector" Pakistan Economic and Social Review 1988;26;
17-64.
[38]. Chishti, S., and F. Mahmud. "The energy demand in the industrial sector
of Pakistan" The Pakistan Development Review 1991;30; 83-88.
[39]. Ahmad, Eatzaz and Idress M. "The time profile of the cost structure in
Pakistan-s manufacturing sector" The Pakistan Development Review
1999;38; 1101-1116.
[40]. Wizarat, Shahida. Sources of growth in Pakistan-s large-scale
manufacturing sector. Applied Economics Research Centre, University
of Karachi, 1987; Discussion Paper No. 88.
[41]. Wizarat, Shahida. Inter-Industry productivity differentials in Pakistan-s
large-scale manufacturing sector. The Singapore Economic Review
1988; XXXIII;2; 49-65.
[42]. Ahmed, Meekal Aziz "Productivity, prices and relative income shares in
Pakistan-s large-scale manufacturing". D.Phil. Thesis, University of
Oxford, Oxford; 1980.
[43]. Wizarat, Shahida and Rashid, Shahnaz. The productivity trends in
Pakistan-s manufacturing: 1955-81. Pakistan Journal of Applied
Economics 1988;7; 109-119.
[44]. Cheema, Aftab Ahmed. "Productivity trends in the manufacturing
industries" The Pakistan Development Review 1978;17; 44-65.
[45]. Mahmood, Zafar and Siddiqui, Rehana. State of technology and
productivity in Pakistan-s manufacturing industries: some strategic
directions to build technological competence. The Pakistan Development
Review 2000;39; 1-21.
[46]. Khan, Mahmoodul Hassan and Burki, Abid A. "Estimation allocative
efficiency and elasticities of substitution in the large-scale
manufacturing sector of Pakistan. Pakistan" Journal of Applied
Economics 2000;16; 49-63.
[47]. Wizarat, Shahida. The rise and fall of industrial productivity in Pakistan
Oxford University Press: 2003.
[48]. Tan, Hong and Lopez, Gladys Acevedo. Mexico: in firm training for
knowledge economy. The World Bank Policy Research 2003; Working
Paper Series No. 2957.
[49]. Barron, John M; Berger, Mark C and Black, Dan A. "Do workers pay for
on-the-job training? Journal of Human Resources 1999;34; 235-252.
[50]. Todaro, Michael P. Wages, industrial employment and labour
productivity: the Kenyan experience. Eastern Africa Economic Review
1969;1; 29-46.
[51]. Kilby, Peter. "Organization and productivity in backward economies"
Quarterly Journal of Economics 1962;76; 303-310.
[52]. Pack, H. The substitution of labour for capital in Kenyan manufacturing.
The Economics Journal 1976;86; 45-58.
[53]. Arrow, Kenneth J. "The economic implications of learning by doing"
Review of Economic Studies 1962;29; 155-173.
[54]. Rosen, Sherwin. Learning by experience as joint production. Quarterly
Journal of Economics 1972;86; 366-382.
[55]. Khan, Shahrukh R; Shaw, W Douglass; Hussain, Fazal. "Causality
between literacy and labor productivity in Pakistan" Economics of
Education Review 1991;10; 245-251.
[56]. Thurstone, L. L. The learning function. Journal of General Psychology
1930;3; 469-93.
[57]. Merrell, Margaret. The relationship of individual growth to average
growth. Human Biology 1931;3; 37-70.
[58]. Rapoport, Anatol. A derivation of a rote learning curve from the total
uncertainty of a task. Bulletin of Mathematical Biology 1960;22; 85-97
[59]. Estes, W. K. "Toward a statistical theory of learning" Psychological
Review 1950;57; 94-107.
[60]. Anzai Y., H. Simon "The theory of learning by doing" Psychological
Review 1979;86; 124-140.
[61]. Hayes, KJ. "The backward curve: a method for the study of learning"
Psychological Review 1953;60; 269-275.
[62]. Rowthorn, R. The Thatcher Revolution. Economic Paper 1989;2; 1-22.
[63]. Burgess, John (1990) "Another Productivity Paradox? The Accord and
Recent Productivity Tends in Australian Manufacturing" Working Paper
No. 3, ACIRRT, The University of Sydney.
@article{"International Journal of Business, Human and Social Sciences:56352", author = "Jamshaid ur Rehman and Shahida Wizarat", title = "Cost and Productivity Experiences of Pakistan with Aggregate Learning Curve", abstract = "The principal focus of this study is on the
measurement and analysis of labor learnings in Pakistan. The study
at the aggregate economy level focus on the labor productivity
movements and at large-scale manufacturing level focus on the cost
structure, with isolating the contribution of the learning curve. The
analysis of S-shaped curve suggests that learnings are only below one
half of aggregate learning curve and other half shows the retardation
in learning, hence retardation in productivity movements. The study
implies the existence of learning economies in term of cost reduction
that is input cost per unit produced decreases by 0.51 percent every
time the cumulative production output doubles.", keywords = "Cost, Inflection Point, Learning Curve,Minima, Maxima, and Productivity", volume = "4", number = "3", pages = "214-8", }
