Muhammad Ali Jinnah University

January 1

Term
Report 2018
Submitted to: Mr. Hasnain Alam Kazmi

Group Members:
Bilal Aleem (FA17-MBAP-0041)
Fawad Muhammad Khan (SP15-BB-0021)
Muhammad Wahaj Ahmed (FA14-BB-0015)
Syed Munib Hussain (SP14-BB-0038)
Contents
Abstract: ........................................................................................................................................................ 2
Introduction: ................................................................................................................................................. 2
History: ........................................................................................................... Error! Bookmark not defined.
 Following is the data breakup of Textile units installed in Pakistan; ............ Error! Bookmark not
defined.
Generalized System of Preferences (GSP): ............................................... Error! Bookmark not defined.
Generalized System of Preferences Plus (GSP Plus): ............................... Error! Bookmark not defined.
 How will Pakistan benefit from attaining GSP Plus status? ........... Error! Bookmark not defined.
 Are there any products of Pakistan textile sector benefit from GSP Plus? .. Error! Bookmark not
defined.
 GSP plus impact on Textile sector of Pakistan? ............................. Error! Bookmark not defined.
Purpose: ........................................................................................................................................................ 7
Research Questions: ...................................................................................................................................... 7
Scope of the Study:......................................................................................... Error! Bookmark not defined.
Limitations of the Study: ................................................................................ Error! Bookmark not defined.
Statement of Need: ........................................................................................ Error! Bookmark not defined.
Literature Review: .......................................................................................... Error! Bookmark not defined.
Variables: ....................................................................................................... Error! Bookmark not defined.
Dependent Variable (Y) ............................................................................. Error! Bookmark not defined.
Independent Variable (X) .......................................................................... Error! Bookmark not defined.
Energy Crises: ................................................................................................. Error! Bookmark not defined.
Financial Crises:.............................................................................................. Error! Bookmark not defined.
Model ............................................................................................................. Error! Bookmark not defined.
Methodology: .............................................................................................................................................. 14
Export table of textile products ............................................................................................................. 24
Stationary Data of Variables: ...................................................................................................................... 27
Energy Crises........................................................................................................................................... 27
Financial Crises ....................................................................................................................................... 28
Growth of Textile ................................................................................................................................... 29
Least Square Method: ............................................................................................................................ 30
Result & Conclusion:.................................................................................................................................... 31
Recommendations: ..................................................................................................................................... 32
References: .................................................................................................................................................. 33

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Abstract:
The main purpose of this study is to find out the impact of energy crises on textile sector of
Pakistan..Textile industry of Pakistan is contributing over 60% in total export; also it is biggest
manufacturing sector of the country. Energy crisis badly affected textile industry of Pakistan
due to that production of textile products decreased. Currently, electricity crisis is big issue in
Pakistan. Textile industry is important industry of the country; therefore this study will identify
how energy crisis negatively affecting textile industry of Pakistan

In this study the data was collected from different sources, primary & secondary data used, 150
questionnaires distributed to employees working in textile industry of Pakistan, in which 140
questionnaires received. EVIEWS by using Regression analysis and Least Square Method ,
Random sampling technique used and MS Excel software utilized for data analysis.

Study findings revealed that employees feel that energy crisis reduced production,
employment opportunities, wages; and companies unable to deliver order on timely manner as
well as textile groups started investing in other countries.

Although the Pakistani textile industry has difficulties due to the energy crisis, the situation can
be reversed if the government takes serious steps to control the energy crisis by providing an
uninterrupted energy supply.

Introduction:

Energy policy is formulated by federal and provincial government in Pakistan, where they
address the issues related to power generation, distribution and consumption of energy by
developing strategies to formulate policies. After the separation from India, a large infrastructure
of electricity was input by the Pakistani Military in 1960 by funds provided by international
monetary sources and various other sources. Most of energy produced by thermal projects at the
time of separation and after that for a long time country’s major dependency was on thermal
power and then lately Hydel power added in the power system. It further expanded through
Pakistan’s first nuclear power plant established in Karachi during 1970’s.

In the era of Government ruling by Pakistan People’s Party (PPP), Prime Minister Mohtarma
Benazir Bhutto launched country’s first and largest energy conservation program for 13,000
Megawatt of electricity production by issuance of 70 Memorandum of understandings (MOU’s)
and letter of Intent to Independent Power Producers (IPP’s). This energy policy puts a diverse
effect on our energy sector as rental power projects put an ultimate negative effect on country’s
power generation process as well as heavy burden on our economy due to the involvement of
complete corruption factors in it. As we all know, that Pakistan’s Textile industry depends on a
non-stop energy supply. As an agricultural economy, its main crop is cotton where Textile
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Centre is in Punjab where all major activities of the industry carries out there continuously, non-
stop working all the day and night. This textile business includes; cotton spinning, hosiery,
sizing, dyeing, yarn, fiber and all other linked industries that are getting effect mainly by power
shutoffs, economical breakthroughs, major change in foreign policies, change in cultural values,
security conditions as well as a large impact by public prosperity and wealth. We focused that
how our textile sector goes toward shutdown or negative market as well as decline in the
business and we evaluate that sufficient power not supplied properly to the Punjab region as well
as other areas. When industry face power shortage, it could not get purchase orders from foreign
markets cause customer reduction, foreign exchange deduction, increase in inflation, GDP
decreased and unemployment ratio move to all-time higher level. In November 2013, Textile
exports are about 58 percent of our total exports among which we figured a sum of 13 Billion
dollar . The entire situation discussed above shows that textile sector with 63 percent of
Pakistan’s exports shifting to other countries due to tough business conditions created in Pakistan
because of poor governance and lack of planning and research in the energy sector. (Farhan
Aziz). It would definitely impact on our GDP, currency, exports economy as you can say the
whole nation gets affected. The textile industry exports contribute about Nine percent of the
Gross Domestic Product (GDP) Mr. Sartaj Aziz (Economist).

Unemployment:
Unemployment generates when people found jobless in a society or in a particular region, but
actively seeking for employment. Energy crises move a huge labour force towards
unemployment in our country. Textile mills are employing more than 20 percent of the nation’s
workforce and 46 percent of the total labour force of the manufacturing sector where Faisalabad
generates the most tax revenue after Karachi that is the main center of Textiles in Pakistan.

Exports:
Pakistan’s Textile industry total export is around 10.2 billion US dollars comprising of 52
percent of total exports, it also represents the principal employment-generating revenue in the
organized and large scale industrial segment. Pakistan has lost the major part of exports due to
electricity shortage and law and order situations. Pakistan has lost the major part of exports due
to electricity shortage and law and order situations. Textile exports in 1999 were $5.2 billion
and rose to become $10.5 billion by 2007. Textile exports managed to increase at a very decent
growth of 16% in 2006. In the period July 2007 – June 2008, textile exports were US$10.62
billion. Textile exports share in total export of Pakistan has declined from 67% in 1997 to 55%
in 2008. It is apparent from the fact that the textile exports contributed 50% of the country’s
total exports in 2012

Gross Domestic Product (GDP):

GDP is the total of market value of all finished goods and services in a country for a given
period, equal to total consumer, investment and government spending, plus the value of exports
minus the value of import. Pakistan's industrial sector accounts for about 24% of the total GDP.
Textile and apparel production manufacturing are Pakistan's largest industries, accounting for
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about 66% of the merchandise exports.

Pakistani textile industry is the gain in the country around 60 percent. The textile industry is
creating about 39% of employment, both skilled and unskilled workers, and has a GDP
contribution of 8.5% (Ministry of the textile industry, 2014). The production of fabrics includes
home textiles, canvases, yarns, garments, towels, cotton, knitwear and knitwear.

Furthermore, the textile industry of Pakistan is composed of 522 textile units with an installed
capacity of 10 ml of mandrels and 115.000 rotors making this country the third largest spinning
capacity in Asia (Faisalabad

Chamber of Commerce and Industry, 2014). In Pakistan, the turnover capacity is around 5% of
the world total and in Asia it is equal to 7.7%. Despite the huge contribution of the textile
industry to the Pakistani economy, the export performance of redundancies (in 2007, reduced
from 64% to 52% in 2013) could mainly be due to energy shortages (Pakistan Economic Survey,
2014) . The energy crisis has severely affected the Pakistani textile industry in many ways, such
as reducing production capacity, increasing costs, increasing unemployment, delaying national /
international orders, etc.
Furthermore, the energy crisis has forced many textile companies to close their production units
or move / invest in another country. Some production units that are the specific export in the
energy crisis can not deliver the order and converted into national production units to meet the
cost of their fixed average cost. In addition to this, the energy crisis delays the delivery program.

Both the inter and intra industry that led to no /less competitiveness in the sector and intense
regional competition such as Bangladesh, India and China, etc.

Economic Contribution of Pakistani Textile Industry

%
Creating Employment 38
Manufacturing 46
Exports 60

Source: Economic Survey of Pakistan, 2013

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The table above shows information on how the significant contribution of the textile industry to
Pakistan's economic growth and the impact of the energy crisis does not only affect the textile
industry, but also Pakistan's economic growth.

From 2001 to 2010, Textile Industry Trends

Years Growth in (%)
2001 4.10
2002 5.20
2003 20
2004 24.50
2005 11.23
2006 8.40
2007 4.05
2008 -0.70
2009 -1.78
2010 1

Source: State Bank of Pakistan, 2011

The table above shows clearly that, from 2001 to 2004, there was a positive trend in the growth
of the textile industry and from 2005 to 2010 growth declined. There are several factors that have
had an impact on the textile industry, but the most important is the energy crisis.

After recent episodes of oil price increase (started from 2006-07), tight financial position and
huge trade deficits forced many developing countries (Pakistan, in particular) to pull out, at least
moderately, from the policy of subsidized energy supply (Alahdad, 2012 and Malik, 2012).
Energy considered as main element of any production process, with the time production process
gone-through transition from techniques of intensive labor to intensive energy (Cleveland,
2005). In recent times, no one can imagine industrialization without an intense process of energy.
Indeed, the uninterrupted supply of energy becomes essential to carry out business activities
without problems. Importantly annual production loss due to power shortages is about two
percent of gross domestic product (Abbasi, 2011).
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Despite of this vigorous and export oriented textile industry, dismal performance of textile
exports (decreased from 65% of total exports in 2007 to 53% in 2012)6 can be mainly attributed
to the stifling power shortages. This crisis has left investors fighting for their survival and, in
some cases, they are shutting down production units in Pakistan and/or moving abroad
(especially in Bangladesh). In other cases, some export-specific production units are, now,
unable to meet international orders and have converted into local production units with capturing
local market in order to fulfill its average fixed cost. Besides, the power crisis caused prolonged
delays in delivery schedule both at intra and inter industry level resulting in less competitiveness
of the industry along with tough competition from regional competitors i.e., China, India,
Bangladesh etc. These problems in textile industry are structural in nature and cannot be resolved
through financial support of the government (Alam, 2011).

Independent and Dependent Variable:

“Effect on Textile Industry” as a Dependent Variable.
“Energy Crises” as an Independent Variable

Scope of the Study:

Scope of this study restricted to impact of energy crises in Pakistan’s Textile Sector. The factors
which are directly affected by current energy crises are our Export that goes on declining, Gross
Domestic Product and Unemployment that goes to the higher level.

Significance of the Study:

This research identifies the factors that influence the decline of the textile industry in Pakistan,
which includes decrease in exports and GDP and increase in the unemployment rate in the
country.
It also analyzes the importance, productivity and performance of the textile industry in which
analyze the difference by examining the comparison of data, facts and analysis.

Problem Statement:
This research analyzes the important problems of the textile industry in Pakistan and the factors
which have a negative impact on their performance, which are due to unemployment, GDP
growth and Exports of the textile industry of Pakistan. This causes the reduction of the
productivity of the sector as we did.We have not seen any regular growth in our fabrics because
of the crises that industry is against. Trends in textiles are related to GDP growth, unemployment
and exports.

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Purpose:
 The purpose of conducting this research is to check the effect of enrgy crises on
the growth of textile sector.

Research Question:
 What is the effect of energy crises on the growth of textile sector of Pakistan?

Objective of the Study:

The main objectives of our research are:

 The textile industry of Pakistan plays an important role in earning foreign exchange,
providing employment to the country.
 Textile sector is back bone of Pakistani economy in our report we will emphasize that
how energy crises impacts textile industry of Pakistan, its intensity as well as conditions
before and after the severity of conditions gone worse which directly hit to country’s
overall economic conditions because of the variables identify.

Organization of Paper
 Section 1 is about introduction
 Section 2 is about research methodology
 Section 3 is about Literature review
 Section 4 is about taxonony
 Section 5 is about Conclusions of this paper.

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RESEARCH METHODOLOGY:
The study is mainly based on literature review which include references from various books,
researches and articles relevant to the subject have been perused and companies selected for
conducting interviews with their management and survey through questioners and personal
visits with addition of help from research journals, news articles etc.

Our research is very conclusive based on Quantitative and qualitative both analyses identify
cause and relationship between energy crises and our textile industry of the country. Due to these
energy based crises; our export, GDP and unemployment level gradually increases. Our research
variables in this research (export, GDP and unemployment level) are validating through
literature review.

To achieve objective of the study; it is important to collect data which can be gathered through
primary or secondary data. For this study both primary and secondary data has used like primary
data collected through using questionnaire technique and secondary data collected by journals,
newspapers, government official websites etc. Random sampling technique used, which refer to
collecting data randomly. Ten questions designed and distributed to 150 people working in
textile industry of Pakistan, in which 140 questionnaires collected. The sample size of the study
consists of 150 people. Moreover, data analyzed in MS Excel software and showed by different
charts. Further the data interpreted in text form as well.
For secondary data least square method is used by EVIEWS to analyse the data.

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DATA ANALYSIS:

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Question two provides data that is showing different age group of people working in textile
industry of Pakistan but higher numbers of employees (55 respondents) are in the age bracket of
31 to 40 years (39% ). However, other employees 34% in the age between 20 to 30 years, 16%
between 41 to 50 and 11% more than 50 years of age.

Q3: Educational Level of Employees?

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Data showing that 8% respondents holding diploma, 11% metric certificate, 24%
intermediate, 44% are bachelor degree holders and 13% are Masters. Overall is indicating
that most employees are graduate working in textile sector of Pakistan.

Q4: Duration of Employment?

49% employees are working in Pakistani textile industry for 6 to 10 years (69
respondents), 12% (16 respondents) working one or less than, 28 for 2 to 5 years while
11% (16 respondents) are more than 10 years. Moreover, data indicated that there is
less percentage of people like 12% which are working one or less than that the reason
could be due to electricity crisis as it decreased production, so employer are enforced to
not hire new employees.

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Q5: What do you think energy crisis increased or decreased
production level of textile products?

Data revealed that 99% of respondents believe that electricity crisis decreased production
level of textile goods. There are machines required in manufacturing process which run
through electricity and if there is crisis of electricity than production will definitely
decrease, so same happen in the case of Pakistan Textile Industry.

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Q6: Do you think energy crisis has badly affected the textile
industry of Pakistan?

Interestingly all respondents of 140 (100% ) feel that energy crisis has negative impact on
Pakistani textile industry. It means that all respondents are aware of negative impact of
electricity crisis on textile business of Pakistan.

Q7: Do you think that energy crisis reduced job opportunities in

Pakistani textile industry?

Above data endorsing question number five as 125 respondents (89% ) feel that because of
energy crisis job opportunities decreased. It is quite obvious when business operations going
smoothly and deliver orders on timely manner than companies create job opportunities. In
Pakistan, textile companies are unable to perform their business activities as required so job
creation opportunities reduced.

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Q8: Do you think that energy crisis affected people working on
wages?

Data revealed that 95% of respondents are strongly agree that people are working on
wages in textile sector are badly affected due to energy crisis, 4% are agree with this
while 1% given neutral view it means they are neither agree nor disagree. Furthermore,
not a single respondent selected disagree, due to shortage of electricity it is
understandable that when machines not operating than wages workers must be affecting.

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Q9: Do you think that intense load shading of electricity enforced
textile companies to pack-up their business in Pakistan and invest in
other countries?

In past years; it is observed that due to electricity crisis many textile companies moved
to other countries, to further verify this asked to respondents on this statement. 39%
strongly agree with the statement that companies are moving to other countries and
reason is shortage of electricity. 43% feel are also agree, 5% showed neutral response,
13% are disagree with that and nobody is strongly disagree that textile companies are
not moving to other countries. Overall it seems that textile companies were moving to
other countries like Bangladesh, India and China (The News, 2014).

Q10: Do you have any suggestion how to get rid of energy crisis and
save the textile industry of Pakistan?
Majority of respondents suggested that government should produce electricity from
Hydropower and Coil. Moreover, they indicated that there is high need of building Dams
as Pakistan is losing billions of Dollars. Majority of employees working in textile industry
of Pakistan feel that currently electricity is expensive because it makes through
petroleum product and if government shift to coil and hydropower can reduce the
duration of load sheding. Moreover, making electricity with coil and water is much
cheaper than petroleum products.

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water, by saving the water electricity companies will be in a better position to produce
cheap and quick electricity. In addition, producing electricity through petroleum product
is expensive and country like Pakistan cannot afford in a long run.

Data Analysis (Questionaire # 2):

Our research is a perception based study determine to perceived impact of high energy
crises,high unemployment, reduction in Exports as well as GDP on the textile sector of
Pakistan. For determining the impact of these variables, we select 60 textile companies
from different area ofSindh such as Karachi, Nooriabad, Hyderabad and Kotri were
selected for analysis.
Below mentioned chart shows the descriptive analysis of primary data collected from 80
textile industry

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Testing of Hypotheses:
As mentioned , three hypotheses were formulated to analyze the impact of energy crises on
The performance of the textile industry. The performance of the textile industry is in terms of exports,
Unemployment and GDP are variables that affect performance. Each of these variable was tested
separately against productivity to analyze the impact and the relationship among them. SPSS is used to
test hypotheses and determine the statistical relationship.

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Methodology:
In this section we are discussing the data which was collected and also the
variables which used in our paper. According to our observation energy crises and financial
crises directly affect the export of textile sector of Pakistan in a negative way. According to our
observation due to energy crises production decrease and there are many firms that was closed
due to energy crises. Energy crises start in 2007 and due to this cause production decreased.
Due to this factor textile export decrease from 65% in 2007 to 53% in 2012.

Export table of textile products

We collected data of total export of Pakistan textile sector and import of textile sector which is
shown in the following table. Pakistan exports different products of textile (raw cotton,
garments, yarn) to different countries in which USA and E.U are main exporter of Pakistan
textile sector. While at the same time Pakistan import machinery and raw cotton for production
of value addition goods.

Year Export Import

(US$ thousand) (US$ thousand)
2005 10259006.36 1261434.69
2006 10869918.43 1347166.01
2007 10738911.38 1904707.42
2008 10628418.10 2276612.14
2009 9640033.54 1588686.56
2010 11610012.87 2415675.94
2011 13582491.66 2929591.76
2012 12921287.39 2325484.36
2013 13670881.64 2658634.36
2014 13772521.98 2896615.65
2015 12918182.86 3023448.27

Export & Import Graph of textile products

16000000
14000000
12000000
10000000
8000000
6000000
4000000
2000000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Exports Imports

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Production & Consumption of Electricity:
This table shows the data of energy which produced and consumed in Pakistan. The data is
collected from World Bank site which shows that Pakistan facing critical situation of energy
crises.

Year Production (Quadrillion BTU) Consumption (Quadrillion BTU)

2015 1.82 2.81
2014 1.81 2.72
2013 1.78 2.62
2012 1.80 2.64
2011 1.714 2.55
2010 1.744 2.61
2009 1.675 2.506
2008 1.655 2.469
2007 1.653 2.484
2006 1.649 2.38
2005 1.489 2.14

Production & Consumption of Electricity (Quadrillion BTU)

3

2.5

1.5

0.5

0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production Consumption

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Global Financial Crises:
Global financial crises had created a very bad impact on the world. Due to financial crises world
economy facing different problems. We want to check the effect of financial crises on textile
sector of Pakistan. For this purpose collect data of total export of Pakistan.

Year Export of Textile Total Export % of total Export

(Thousand US $) (Thousand US $)
2005 10259006.36 16050200.73 63%
2006 10869918.43 16932873.21 64%
2007 10738911.29 17838406.58 60%
2008 10628418.10 20279045.86 52%
2009 9640033.54 17554698.48 54%
2010 11610012.87 21413102.68 54%
2011 13582491.66 25343768.66 53%
2012 12921287.39 24613675.62 52%
2013 13670881.64 25120883.20 54%
2014 13772521.98 24722182.15 55%
2015 12918182.86 22089018.06 58%

Contribution of Textile Sector on Total Exports of Pakistan

(Thousand US $)
30000000

25000000

20000000

15000000

10000000

5000000

0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Export of Textile Total Export

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Stationary Data of Variables:
Energy Crises
Null Hypothesis: D(EC) has a unit root
Exogenous: None
Lag Length: 0 (Automatic - based on SIC, maxlag=1)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -3.307712 0.0043

Test critical values: 1% level -2.847250
5% level -1.988198
10% level -1.600140

*MacKinnon (1996) one-sided p-values.

Warning: Probabilities and critical values calculated for 20
observations
and may not be accurate for a sample size of 9

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(EC,2)
Method: Least Squares
Date: 12/07/17 Time: 01:42
Sample (adjusted): 2007 2015
Included observations: 9 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

D(EC(-1)) -0.818882 0.247568 -3.307712 0.0107

R-squared 0.568687 Mean dependent var -0.016667

Adjusted R-squared 0.568687 S.D. dependent var 0.121450
S.E. of regression 0.079761 Akaike info criterion -2.115116
Sum squared resid 0.050895 Schwarz criterion -2.093202
Log likelihood 10.51802 Hannan-Quinn criter. -2.162406
Durbin-Watson stat 2.448008

First difference - None

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 Financial Crises
Null Hypothesis: D(FC,2) has a unit root
Exogenous: None
Lag Length: 1 (Automatic - based on SIC, maxlag=1)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -3.669865 0.0031

Test critical values: 1% level -2.937216
5% level -2.006292
10% level -1.598068

*MacKinnon (1996) one-sided p-values.

Warning: Probabilities and critical values calculated for 20
observations
and may not be accurate for a sample size of 7

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(FC,3)
Method: Least Squares
Date: 12/07/17 Time: 01:45
Sample (adjusted): 2009 2015
Included observations: 7 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

D(FC(-1),2) -2.394660 0.652520 -3.669865 0.0144

D(FC(-1),3) 0.605535 0.376720 1.607385 0.1689

R-squared 0.824107 Mean dependent var -538509.8

Adjusted R-squared 0.788928 S.D. dependent var 6913804.
S.E. of regression 3176379. Akaike info criterion 33.01534
Sum squared resid 5.04E+13 Schwarz criterion 32.99988
Log likelihood -113.5537 Hannan-Quinn criter. 32.82433
Durbin-Watson stat 1.333844

Second difference-None

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 Growth of Textile
Null Hypothesis: D(GT,2) has a unit root
Exogenous: None
Lag Length: 1 (Automatic - based on SIC, maxlag=1)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -3.320597 0.0053

Test critical values: 1% level -2.937216
5% level -2.006292
10% level -1.598068

*MacKinnon (1996) one-sided p-values.

Warning: Probabilities and critical values calculated for 20
observations
and may not be accurate for a sample size of 7

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(GT,3)
Method: Least Squares
Date: 12/07/17 Time: 01:39
Sample (adjusted): 2009 2015
Included observations: 7 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

D(GT(-1),2) -2.142970 0.645357 -3.320597 0.0210

D(GT(-1),3) 0.571885 0.387314 1.476540 0.1998

R-squared 0.765161 Mean dependent var -139499.1

Adjusted R-squared 0.718193 S.D. dependent var 2937276.
S.E. of regression 1559267. Akaike info criterion 31.59229
Sum squared resid 1.22E+13 Schwarz criterion 31.57683
Log likelihood -108.5730 Hannan-Quinn criter. 31.40128
Durbin-Watson stat 1.916015

Second difference – None

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Least Square Method:

Dependent Variable: GT
Method: Least Squares
Date: 12/07/17 Time: 01:56
Sample: 2005 2015
Included observations: 11

Variable Coefficient Std. Error t-Statistic Prob.

FC 0.390520 0.081374 4.799094 0.0014

EC 250578.9 1614461. 0.155209 0.8805
C 3003070. 3061766. 0.980829 0.3554

R-squared 0.869217 Mean dependent var 11873788

Adjusted R-squared 0.836522 S.D. dependent var 1531529.
S.E. of regression 619235.1 Akaike info criterion 29.73736
Sum squared resid 3.07E+12 Schwarz criterion 29.84588
Log likelihood -160.5555 Hannan-Quinn criter. 29.66895
F-statistic 26.58507 Durbin-Watson stat 0.771687
Prob(F-statistic) 0.000293

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Result & Conclusion:

Variables Coefficient Std.Error T.Statics Prob.

FC 0.3905 0.0813 4.79909 0.0014
EC 250578 1614 0.15520 0.8805
C 300307 3061 0.98082 0.3554

After using Regression analysis & least square method, it can be easily concluded that the
financial crises is affecting the growth of textile sector in a negative way and the financial crises
have an inverse relationship with the growth of textile sector of Pakistan. The value of T-Statics
is 4.799 and the value of probability is 0.0014, it indicates that financial crises have a strong and
negative effect on this sector, while on the other hand the T-Statics value of Energy Crises is
0.155 and the value of probability is 0.8805, it indicates that the energy crises have a little bit
effect on the growth of textile sector of Pakistan.

After collecting the data of Energy Crises and Financial Crises from World Bank from 2005 to
2015, the data was briefly analyzed in EVIEWS by using Regression analysis and Least Square
Method it can be easily concluded that there are many factors that are affecting the growth of
textile sector of Pakistan but according to our study the main factor is Financial Crises that is
affecting the textile sector of Pakistan while on the other hand the Energy Crises is affecting the
textile sector but comparatively in a very low proportion.

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Recommendations:
 According to research in 2005, in 2002-2003 there is seen an incredible numbers of
investment in value added expansion. Foreign Direct Investment has reached to
approximately US $4 billion which is directly affecting the textile sector in a positive way
(both in terms of quality & quantity) and is creating new jobs to approximately 300,000
people but still the volume of investment in this sector is not reasonable in comparison with
the possible ways that is available in Pakistan’s textile sector. The government should
urgently set up a benchmark investment requirement to create more capacity and to
upgrade the production base.
 The main departments of related to textile sector in which Commerce, Foreign Affairs and
The Board of Investment should try to shows positive face of textile sector, due to this
strengthen increasing and export also increase gradually.
 The main export of Pakistan cotton, fabrics and raw yarn rather than value added products.
Pakistan should focus on value added products like Hosiery, Knitwear, Garments, and other
textile products and this can increase the export of textile sector gradually. In this context
textile owners and Government need to increase production of value added goods due to
this export also increase. For this purpose government make policies which support value
added goods.
 The government of start joint project in textile related areas and should also give subsidy to
upgrade their machinery. There is also a need if up-gradation of power looms.
 There is also a need of training human resource where training programs should be started
to improve the efficiency of labor.
 There are many employees which are now a days working on daily wages, the textile
owners downsizes which directly affects the unemployment ratio.
 The government should immediately start to produce more electricity in order to reduce
the cost of production of textile sector of Pakistan.
 All Pakistan Textile Manufacturing Association (APTMA) of Pakistan should start focusing on
research & development to increase the productivity, to enhance the quality and to reduce
the cost.

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www.eia.gov/beta/international/data/browser/#/?pa

http://www.ptj.com.pk/Web%202004/03-2004/global.html

https://wits.worldbank.org/CountryProfile/en/Country/PAK/Year/LTST/TradeFlow/Export/Partner/by-
country/Product/50-63_TextCloth

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