The Pakistan Development Review 43 : 4 Part II (Winter 2004) pp. 493–513 Total Factor Productivity Growth in Pakistan’s Agriculture: 1960–1996 SHUJAT ALI * 1. INTRODUCTION Nearly one-quarter of Pakistan’s Gross Domestic Product (GDP) is contributed by the agriculture sector and it employs nearly 44 percent of the labour force. Agricultural exports, directly and indirectly, make up a large proportion of total exports and foreign exchange earnings of the country. Agriculture in Pakistan faces considerable challenge in the 21st century. The present population of about 149 million, growing at about 1ta. 9 percent per year, is expected to double to 298 million in about 40 years. Pakistan’s agriculture has experienced rapid growth since the 1960s. The average annual growth of about 4 percent in the four decades before the onset of the new millennium has exceeded the population growth that touched about 3 percent for a substantial part of this period. 1 This rate of growth in agriculture has been sustained by the technological progress embodied in the high- yielding varieties of grains and cotton with supporting public investment in irrigation, agricultural research and extension (R&E), and physical infrastructure. Agricultural growth, in turn, has made significant contribution to the overall economic growth of about 6 percent per year during this period. Despite rising per capita income, food demand is likely to grow rapidly given the low level of current per capita income. There is a compelling need for sustained efforts to increase production of essential items (wheat, edible oils, etc.). Faced with limits to further expansion of cultivated land and slowing returns to further input intensification, productivity growth assumes a central role in meeting the challenges of the future. The most comprehensive measure of aggregate or sectoral productivity is Total Factor Productivity (TFP). However, given the paucity of good data, this area Shujat Ali is Programme Director, Punjab Resource Management Programme, Planning and Development, Government of the Punjab, Lahore. Author’s Note: This paper is based on the author’s doctoral dissertation titled “Total Factor Productivity Growth in Pakistan’s Agriculture: 1960–1996” and submitted to Simon Fraser University, Canada, in the year 2000. 1 Pakistan’s population grew at an average rate of 3 percent per annum till the mid-1980s. Thereafter, it slowed down to an average rate of 2.6 percent per annum during 1985-86 and until 1999- 2000.