This is not out of cynicism. This is in fact out of cold, hard analytics. Pakistan will never become a middle income country (let alone a high income one) as it continues to under rate and under prioritize investment in its human capital. It is a tired and jaded slogan but it is as true today as it was 6 decades ago - only sustained and quality education of the masses will break GDP growth out towards the double digit level and keep it there. Otherwise, the economy will remain beholden to local/global liquidity cycles where periods of fast growth will be followed by periods of stagflation/stagnation.
Currently Pakistan invests the least in its human capital in the entire South Asia - a group that is not, even as a collective, very high on any scale of global economic development. So we are the worst of the worst. But the other South Asian nations are well ahead in recognizing the need to invest and develop human capital. Already countries like Bangladesh and Sri Lanka are defying the twists and turns in the global liquidity cycle to post sustainable break out in the production possibility frontier. Indias literacy rates are well known - with rising wage costs in China, India might finally be able to bring, in a big way, its 1.2bn people into the global supply chain.
Unfortunately, in Pakistan, despite higher enrollment rates in each subsequent year, the quality of education continues to deteriorate and leaves much to be desired. Even if the average kid makes it out of the horror that is the public secondary and high school system, the higher education institutions available to them have inadequate facilities, poor teachers and terrible learning environments. Many private universities have sprung up but they are only a drop in the ocean. And how big is this ocean? As per estimates, 64 million Pakistanis are below the age of 14. Another 42mn sit in the age 15 to 24 age bracket. That is more than 100mn that will be requiring or are acquiring education over the next 10 years.
100mn. That is more than the population of Germany, Egypt or Israel. It is almost 1/3 the population of the USA. One can easily say there are more young Pakistanis than Germans, Egyptians or Israelis in the world.
These young Pakistanis, unfortunately, are not just Pakistan’s problem anymore. Nicholas Kristoff in a recent op-ed in the NYT said it right (and I summarize) - the wahabi sunnis are well advanced in their strategy of disseminating their constrictive ideology than developed countries; these sunnis are spending money at the primary and secondary level through madrassah systems of the Islamic world, to create a formidable formation of indoctrinated youth. In contrast, advanced countries are well behind in ensuring that the precious aid that they do provide the developing world is used to for providing a more modern and more centric education.
Poor labor education and training leads to lower total factor productivity. Inadvertently, in a highly competitive world, Pakistani manufacturing has struggled to compete. The country has been moved upstream (that is non-value add) on almost all exports supply chains that it used to significantly contribute to. Short term palliatives like high protection to import substitution industries, substantial subsidies to export sectors and favorable monetary/FX policies have allowed manufacturing to come up for breath. However as its share of the global pie shrinks or stagnates every year, capital moves towards short term trading opportunities (commodities, asset markets, etc) rather than investments that create jobs, income, wealth and, eventually, social mobility. Labors vicious cycle gets that much more vicious. With falling to stagnant incomes, social and communal instability increases leading to poor security, bad democracies and terrible politics.
In a gist - welcome to Pakistan: current, past and future.
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