Term of Trade and Government Supportive Policies Effects on Productivity of Labor per Worker: An Econometric Study Case of Pakistan

摘要

This research paper analyses the term of trade between agricultural and non-agricultural sector andits impact on productivity of labor per worker. The findings of this research paper in short run and long run isdifferent from previous studies that the deteriorated Net Barter term of trade (BTOT) between agriculture andnon agriculture along with government assisted policies raises the productivity of labor per worker in case ofPakistan. As 1 % increases the net barter term of trade raises the productivity of labor worker per by 24.7 % inshort run and 9 % in long run. The other variables in the study like Foreign Direct Investment (FDI), ExchangeRate (ER) and Inflation Rate (INF) in the study are statistical significant at 5%. Further to check the stability ofthe model Cumulative Sum of Recursive Residual (CUSUM) and CUSUM sum of square tests is applied testthe stability of the model. Both CUSUM and CUSUM sum of square graphs lies in between 5% critical boundlimits confirms no structural breaks in the model. The study concludes that the deteriorated term of trade ofagricultural sector but government supportive and Assistance rates policies in favor of agric sector hasincreased the productivity of labor per worker of this sector in case of Pakistan. I have reviewed all the literaturebut not found such type of research in case of Pakistan.