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Improved education and health tie up human capital growth

The significance of human capital in the development and expansion of economy could not be emphasized further. Its status could be gauged in any economy by education and health indicators as their main parameters. Productivity could be boosted if healthy people are inducted in work force as they could work efficiently and effectively. Fundamental health indicators have been on a positive path for the past few years. However, despite this advancement, the pace of progress is far low, when evaluated with the improvement recorded by regional countries. State of education sector, on the other hand, is also poor. Education sector is facing various hurdles including underinvestment, capacity deficient public sector together with costly and unregulated private sector.

There is a strong positive relationship of human capital (education enrolment, decline in infant mortality rate, and physical capital) and health indicators (life expectancy, infant mortality rate, health expenditure and population per bed) on economic growth. Despite improvements in the basic health indicators of child mortality and nutrition over time, the state of health sector is very bleak. The rising population coupled with alarming health indicators especially in the case of children health outcomes, is a source of great concern and is an indication of lack of clear and long term vision in public health policies. Current challenges include natural catastrophes, institutional, administrative and political changes, weak commitments to economic reforms, lack of capacity and willingness to carry out large-scale projects and fading commitments by the development partners due to factors like global recession and delayed ownership of SDG agenda at provincial and federal level.

Provision of health services depend on conditions and availability of basic health infrastructure (Health establishment and health personnel). Therefore, state of health infrastructure is of great importance especially in connection to growing population. Health expenditure is also considered as a public good as it adds to the capacity of the economy, many developed economies allocate huge budget for universal medical coverage and others look for measures to improve coverage. However, despite a positive link between economic development and a healthy society, the health sector still gets low priority in the public policies and allocation decisions of the investment funds in Pakistan. In particular, public sector health expenditures as a percentage of GDP have not only remained immensely low but have also been falling consistently since 1990s. Not only the ratio has been declining, Pakistan fell far lower than health related spending in many developing countries.


Going forward, the goal of economic development may not be achieved if the state of neglected human capital prevails and no attention is given to training Pakistani talent for skills and innovation. In the light of growing consensus on the significant positive effect of healthy human capital on economic growth and development, most neglected areas of human capital (weak public education and health system) may provide hindrances to persistent economic growth in the economy.

It is imperative that policy makers must prioritize their focus towards adequate and quality provisioning of public education and health services in order to build a solid foundation for long-term economic growth. In order to have a meaningful outcome in terms of comparable parameters, priority should be to follow international best practices. There is no quick fix that can be obtained by spending money, bringing foreign aid, investing in infrastructure etc., if standards in human capital are not enhanced and maintained at that level.

The writer is a Karachi based freelance columnist and is a banker by profession. He could be reached on Twitter @ReluctantAhsan

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