Energy Crisis and Comparative Advantage Industries: Empirical Evidence from the Pakistan Economy

Abstract

The core purpose of the study is to analyze the effects of the energy problems on the competitiveness and performance of major selected Pakistani industries. The data used for the study is from the years 1999 to 2015. The industries used in the research are Leather, Textile, Tobacco, Pharmaceutical, and Sugar. The Balassa Index is firstly used to compute the competitiveness of the above-mentioned industries and reveals that except tobacco industries all other industries sustain a comparative advantage even before and during the crisis regime. Secondly, a GMM estimation is done to analyze the effect of energy problems on the performance of the companies. The conclusion of the paper suggests that the supply of energy has a crucial role in enhancing the net return and competitiveness of the industrial sector in Pakistan.