Abstract:
A fascinating example of the fluctuating fortunes of Pakistani exports is that of the footballs produced by a cluster of manufacturers in Sialkot. Dominated by Pakistani firms, the sector is now under heavy threat from cheaper balls produced in East Asia (particularly China). What is striking is that the technology used by most firms has not progressed significantly in the last 30 years. This raises the question of whether Pakistan is falling behind the technology frontier. Using data from a sample of firms, we map the football production process and focus on different cutting technologies to compare productivity across firms and measure the benefits of upgrading this technology across firms of different sizes. Our results show that technology upgrading comes at a cost, but is worthwhile for firms that need to produce a large volume of balls. However, the falling demand for Pakistani balls may not justify this for most small and medium firms in the sector, which make up the vast majority of firms in the cluster.
