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Dividends of state investment in education and health

Dividends of state investment in education and health

Education is critical to the social and economic development and has a profound impact on population health. Education and health projects in the public sector are considered to be the biggest initiatives any government can undertake. Undoubtedly spending on these two sectors is a measure of social and economic value in a developed world. Pakistan’s present government is putting a lot of focus on these two sectors, it has promised to increase the spending on education and health sectors as well and will also improve the quality of service in both the sectors. World Bank has been asking the Government of Pakistan (GOP) to triple its investment in health and education if it wants to achieve higher growth trajectory on a sustained basis. Spending on health and education which stands at around 3 percent of GDP should be jacked up to 8 to 9 percent of GDP on annual basis.

Under the 18th Constitutional Amendment, education has been devolved to the provinces which are now responsible for the award of education up to intermediate level. As per the Economic Survey 2017-18, public expenditure on education has decreased as a percentage of GDP, it is estimated to be 2.2 percent in the fiscal year 2017-18 as compared to 2.3 percent of GDP in the fiscal year 2016-17 whereas literacy rate declined from 60 to 58 percent. As per an estimate, the private sector expenditure aggregates to 1.54 percent of GDP in the education sector. All past governments have set the goal of 4 percent of GDP to be spent on education, which was never achieved. As per a report of the State Bank of Pakistan, the average expenditure on health, since 1949-50, remained around 0.6 percent of the GDP. These percentages are less than the WHO benchmark of at least 6 percent of GDP required to provide basic and life-saving services.

In Pakistan, the private sector’s spending on the educational sector is significantly higher than the spending by the government. Till 1970s, there was no concept of private schools and colleges and there was virtually no university but only a few private primary schools existed in the private sector. Governments were taking the responsibility to provide the education to masses. Today there are over 70 HEC recognized universities in the private sector only. Government allocates funds but those are not sufficient enough to cater to the country’s needs. While looking at the numbers, we realize that almost 70 to 80 percent of the government budget allocation goes into the payment of salaries, medical bills, perks and pension of staff. While the remaining 20 to 30 percent is being spent on the infrastructure and new initiatives, which is not sufficient to address the actual need. This trend shows that the education and health sectors in Pakistan are not fully optimized and are seriously overstaffed, which also dilutes the efficiency. It doesn’t mean that the government should lay off staff to bring it in line with the international standards but a significant one-off capital spending in these sectors can bring per resource cost down.

Unfortunately, the gap in the quality of service between existing public and private hospitals and schools is now widening where serious state funding can only narrow this gap. As a matter of fact, the share of health and education funding in Pakistan has declined over years, which is defiantly not an encouraging thing. When education and health are not on the priority list of the successive governments and these sectors get the leftovers then one should not be surprised with the current state of affairs in the education and health sector. On another side, private schools and hospitals are increasing their fees without any check and it is becoming exceedingly difficult for middle-class income group to send their children to private institutions or to avail medical facilities from a private hospital. Such issues badly affect social and economic well-being throughout the country and create depression, anxiety, and unrest among masses. It is, therefore, a considered opinion that investment in public sector educational institute and hospital can result in billions of rupees of social and economic benefits for the society at large.



Pakistan’s over 100 million population is less than 30 years of age, which effectively comprises of school and college going youths. Therefore, investing more in this segment can give unbelievable results. Recently a study titled “Measuring human capital: A systematic analysis of 195 countries and territories, 1990 to 2016” was conducted (first-ever scientific study ranking countries for their levels of human capital) by Institute for Health Metrics and Evaluation (IHME), an independent global health research organization at the University of Washington, USA. Pakistan ranked 164th in the world for its investments in education and healthcare, states. The country is placed just behind Rwanda (ranked 163rd) and is just ahead of Tanzania (ranked 165th), with the United States standing at 27th place and India at 158th. The research also shows Pakistanis spend fewer years in school than most in Asia and around the world. An average national spends 8.6 years out of a possible of 18 years in school; as compared to Bangladesh’s 8.2 years and India’s 10.4 years. That puts Pakistan at number 171 in the world in terms of educational attainment. However, Pakistan has done slightly better in terms of education quality. The study also measures the quality of learning in school and Pakistan ranked 135 in the world – lower than Nepal (127) but higher than India (150).

Public education is a worthy investment for the government having immense social and economic benefits. It’s a fact that individuals who graduate and have access to quality education throughout primary and higher school are more likely to find gainful employment and earn more than others. Economic Survey of Pakistan 2017-18 says “Human welfare and development is a basic right of every individual as enshrined in the constitution of the Islamic Republic of Pakistan and the charter of the United Nations. However, at the global level and within nation states, a tug of war has been on-going for decades whether welfare or growth should be the barometer of real economic development. Health, education, drinking water, and sewerage was considered to be the main contributor of the welfare of the citizens of a country. It was for this reason that improvement in these subsectors of the economy always received top priority in different models of economic development.”

Widespread improvement of social and economic conditions of the public at large can only be possible with if education is spread and healthy workforce is better trained for work. The government has a realization that if Pakistan’s population is educated then it can better address the unemployment, can reduce dependence on other country’s financial support, and will be able to generate greater tax revenues. It is imperative that policymakers 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.

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