Is Pakistan’s education crisis responsible for the economic crisis?

Pseudo modernism has labeled the education status of a country to be the major determinant of economic growth. As per the International Bureau of Education, the education sector of a country must ideally inculcate certain lifelong competencies in students so that the economic and social spillovers of education may add to the economic development of the nation. There is no doubt that the economic returns to education are tremendously positive, nevertheless, the marginal returns – measured by the employability and productivity of labour – vary across the globe. New growth theories also emphasise on treating education as a separate input in the production function as it has a tendency to make production units achieve economies of scale (Sianesi and Reenen, 2000). Social returns to education on the other hand include a reduction in poverty incidence, improved civic behaviour, improved health and the minimisation of political cynicism.

Despite these spillover effects of education, their universality remains overrated due to the incompetency of the education system, especially in the case of developing countries. In Pakistan, despite a strong emphasis on the pseudo modernistic nexus between education and economic growth, the ground realities give a contrary picture. The figure below reflects the difference in the trends of the education budget (as a percentage share of the GDP) and rate of economic growth over a decade. It is clear from the figure that the growth rate neither responds to the changes in the education budget nor does it follow the trend similar to that of the education budget. The education budget has remained within the range of 2% to 3% of the GDP since 2009, whereas the trend of growth rate has shown significant volatility i.e. it has touched 6% and has also become negative during the same time span. Thus, the volatility of economic growth rate is independent of the education budget.

Contributing factors behind this non-association between education and economic growth can be divided into three broader categories: 1) governance related challenges; 2) access related challenges and; 3) education quality related challenges.

Governance related challenges

Whenever the issues associated with the education system are raised, increasing the education budget is considered as the frequently proposed remedy. The education budget of Pakistan has increased from Rs 304 billion to Rs 980 billion since 2009, but the percentage share of the GDP allocated for the education sector has remained between 2% to 3%, which is far less than the international standards (i.e. 15% to 20%) and cannot meet the education demand of the growing population.

Education is given the least priority in terms of budgetary allocations in Pakistan. The possible reason behind this is the fact that that the relationship between education and economic growth is nonlinear i.e. the marginal returns to educating one generation can only be seen in the long-run, not in the short-run (Stiglitz, 2006). In other words, education takes three to four cycles of government regimes to deliver returns, therefore the elected leaders prefer investing in sectors that either give returns in the short-run or increase the probability of their re-election in the very next government regime.

Adding to the misery, a significant proportion of this 2% to 3% education budget remains unspent every year. For instance, during 2017-2018, 45% of the education budget of Punjab, 35% of the education budget of Sindh, 43% of the education budget of Khyber Pakhtunkhwa (K-P) and 41% of the education budget of Baluchistan remained unspent. It is important to note that increasing the education budget is an important tool to solve problems associated with the education system, but it can only address supply side issues, leaving behind the issues that impact education demand (such as access to education and education quality) unaddressed.

Access related challenges

In Pakistan, despite the provision of free and compulsory education, out of pocket expenses and the opportunity cost of sending children to schools are higher than making children an earning member of the household. This results in a low school enrollment rate, low transition rate and low retention rate. As per the Human Development Report (2018), Pakistan needs another 60 years to get all children of school going age into school. Moreover, an astonishing 81% of the public schools in Pakistan are primary schools, hence posing a huge challenge in terms of retention and transition of students at the post-primary level.

Quality related challenges

The Annual Status of Education Report (ASER, Pakistan) details a number of grade five students who are unable to read grade three Urdu and English text books. Empirical evidence further reveals that reading and writing inability, once developed during academic grades, offers severe implications for years to come (Juel, 1988). This puts human capital development at stake. Moreover, in Pakistan, formal education and technical education are treated as substitutes rather than compliments, and the majority of students enrolled in technical and vocational training institutes are those who drop out of school. This substitution keeps the skills level of college and university graduates low. However, the irony is that the employers prefer employees with a higher level of education over TVET diploma holders. Eventually, Pakistan ends up having worse performers in the job market, and the unemployment rate among graduates is higher compared with other segments of the labour force (UNDP, 2018).

In light of the aforementioned incompetence of the education system, relating either to education demand or education supply, it is inferred that the determinants of economic growth are beyond the education sector itself. Volatility in the growth rate is largely because of unprecedented price rises that have increased the cost of living and shrunk peoples’ marginal propensity to consume; and foreign debt that rose from $73.9 billion (July 2016) to $105 billion (May 2019) within past two years. It means that every single citizen owes Rs. 82300.73 on account of increase in the external debt, and this debt burden reaches Rs. 125,000 if the state’s internal liabilities are also incorporated. Unfortunately, Pakistan relies on the policies framed by international monetary authorities to address these economic challenges, ignoring the fact that those policies are designed considering the economic condition of developed countries and that the multiplier effect of the same policy is always different for developed and developing country. We cannot reap targeted outcomes unless we frame policies that address our own priorities.

We need effective utilisation of the resources that we already have in this country. Pakistan is a labour abundant country with 64% of the population below the age of 30. The economy must utilise its labour productively by imparting certain skills in them so that the labour brings value addition to the production sector and eventually to the GDP. We must learn from the example of Muslim emperors who ruled the subcontinent for centuries and made the economy so lucrative that 23% of the world’s GDP came from the subcontinent. This was not the outcome of education but skill development.