Pakistan’s human capital opportunity

Pakistan’s human capital is low and has improved only marginally over the past several decades. A recent study by the World Bank shows that Pakistan’s Human Capital Index (HCI) of 0.41 is low both in absolute and relative terms, which means that a baby born in Pakistan today will only be 41% as productive as they could be if they enjoyed complete education and full health . Indeed, Pakistan’s human capital outcomes are more comparable to Sub-Saharan Africa’s, which has an average HCI of 0.40. On the other hand, inequalities in human capital outcomes have persisted and even widened over time between the rich and poor, men and women, rural and urban areas, and among the provinces. Pakistan also highly under-utilises its human capital due largely to low female labor force participation.

With facts such as these, we don’t need to convince anyone that there is a human capital crisis in Pakistan. Pakistan’s citizens, three-quarters of them under the age of 35, have very recent memories of shortcomings in the schooling system and in basic health services. Federal and provincial governments, as well as Pakistan’s well-educated bureaucracy, can easily cite high stunting rates, high childhood mortality, high out-of-school population, and low learning levels as key challenges. Every woman in the country, and even many men, can tell personal examples of unequal treatment in school, the many safety and normative challenges to female labour force participation, or access to quality health services. And all political leaders are keenly aware of public opinion polls showing voter concerns about the lack of jobs, reflecting the low utilisation of human capital.

But we do want to re-emphasise that investing in human capital is in fact an enormous opportunity for Pakistan, and more importantly, that this is a very safe bet . Starting from a very low baseline means that Pakistan can focus on the basics of good health and education governance. The Pakistan Human Capital Review report describes various scenarios for the country’s human capital growth: business as usual, to the level of its peers, to the average of a low-middle income country, or towards the levels of an upper middle-income country. The size of the potential returns has surprised us. But we were perhaps even more surprised to find that Pakistan can really do this. Let us try to explain why.

The size of the potential returns from investing in Pakistan's human capital growth has surprised us. But were were perhaps even more surprised to find that Pakistan can really do this. 

First, Pakistan has repeatedly demonstrated it can deliver effective services at scale. In our report, we document that Pakistan has made enormous progress over the last 30 years, despite a massively expanding population. This is because enormous programs have been launched, such as the Lady Health Workers program and free basic and compulsory education. Pakistan’s highly effective management of the Covid-19 pandemic, the national vaccination campaign, and delivery of fast and targeted cash support to about 15 million families, are other shining examples of Pakistan’s state capacity.  Pakistan’s state machinery, when mobilised well, can launch effective informational campaigns, provides services in schools and basic health units and even at the household’s door steps at scale.

Second, there is a wealth of evidence about what to do and how to do it. Family planning should be the top priority and scale-up has been proven to work in Pakistan. Both men and women need more support and information to manage how many children they desire. If not, Pakistan will continue to expand schooling and health services, just to serve the growing population with subpar quality of services. Pakistan has reduced fertility rates over the last three decades, but not at the level and speed of Bangladesh or Indonesia. Effective states coordinate population planning at all levels of government, but also mobilise civil society and religious institutions in their advocacy efforts. In education, investments in low-cost school and classroom expansion, along with making sure that every classroom has a competent teacher, has enormous payoffs. Cash transfer schemes for adolescent girls’ enrolment in schools have been proven to increase enrolment. In health, initiatives like ‘kangaroo motherhood’ and provision of iron and folic acid supplementation for pregnant women with multiple micronutrient supplementation are proven, cost-effective interventions.

Third, the pay-off is massive. Even if the past three decades of improvements can be sustained, GDP per capita is expected to grow by a mere 18% through 2047, the 100th anniversary of Pakistan’s founding. But if Pakistan can boost human capital investments and its HCI to the level of its peers, per capita GDP growth could almost double to 32% . If Pakistan improves both its human capital and its use of human capital, bringing adults into employment outside of subsistence farming, where the gains from human capital are typically lower, GDP per capita growth could rise by 144%, an eight-fold increase over business-as-usual. The less fortunate and the nation as the whole stand to benefit the most from such as investments. If the public sector fails to make these investments, they also stand to lose the most. 

If Pakistan can boost human capital investments and its Human Capital Index to the level of its peers, per capita GDP growth could almost double - to 32%. 

The challenge to improving human capital outcomes in Pakistan is that progress has been too slow, and too uneven. What is most needed, and may be hardest to achieve, is to exercise stewardship over improving human capital outcomes in the long term, making it an urgent national priority, and ensuring continuity to stay the course. Improving human capital requires long-term planning and commitment that goes beyond the tenure of any government or political cycle. We understand investments in human capital often take a long time to bear fruit and the outcomes are not always immediately visible. This contrasts with other investments such as roads, bridges and other physical infrastructure. Improving female labour force participation will require hard work, because this requires educating girls, addressing social norms, engagement with social networks, provision of childcare and ensuring safety and security at work and on the way to and from school and work.

With the pandemic and a devastating flood deepening its already poor state of human capital, Pakistan will need to take bold actions to tackle its health and education challenges and declare a human capital emergency. Sustained investments in human capital require a well-coordinated, cross-sectoral effort, and the whole of society approach, across all federating provinces and regions, with a shared vision and alignment. This could start with Pakistan’s leaders across all political divides and down to the teachers and health workers in the small towns and villages across the country. We are confident that this is possible, that this is something that unites all Pakistanis, and will make the country stronger in both the short and the long run. With the right policies and adequate investments in human capital, Pakistan’s growing working-age population can become healthier, more educated, more skilled, more productive.  They can also earn more if the economy generates more and better jobs. Making this an urgent priority will ensure Pakistan realises its immense potential and abundantly prospers as a nation.

Making the right policies & adequate investments in human capital an urgent priority will ensure Pakistan realises its immense potential and abundantly prospers as a nation. 

This blog is part of a series based on the Pakistan Human Capital Review: Building Capabilities Through Life.