Energy Crisis, Firm Productivity, Political Crisis, and Sustainable Growth of the Textile Industry: An Emerging Economy Perspective

Pakistan’s textile industry is suffering from an electricity shortage and political turmoil. Due to a state of instability in which nothing is certain, things cannot be brought into balance by the state. Therefore, we employ firm-level data (101) to investigate the impact of expected and unexpected power outages on textile firm productivity throughout 2014 to 2019. The study assesses the importance of political stability for the flourishing of Pakistan’s textile sector. Outages were found to significantly negatively impact textile sector sales revenue, likely leading to lower results (by 0.240% and 0.0569%). The duration and frequency of outages had significant adverse influences on reducing firm revenue. It has been estimated that a 1 h outage will cause to loss of revenue of approximately 24 percent. Comparatively, load-shedding hours had a smaller impact on lowering firms’ sales revenues, which were 5% to 8% with and without political stability inclusion. Further, outage hours decreased the export of textiles by 0.286%. The magnitude of export reduction by outages and load shedding was higher. The driving impact of political stability was higher than the impacts of expected and unexpected shortages. A stable political system is necessary to develop feasible solutions.