Education is widely recognized as a social responsibility, a fundamental constitutional right, and a pathway to individual advancement. Yet, equally important, it is a strategic economic investment. For a country like Pakistan, where sustainable economic growth must generate productive employment opportunities for a young and rapidly growing population, investing in education extends far beyond constructing schools or increasing enrolment. It means building human capital the knowledge, skills, creativity, and capabilities that enable individuals to use physical, technological, and financial resources more efficiently and productively. Viewed from this perspective, education is not merely a cost borne by households and governments; it is a long-term investment in the productive capacity, competitiveness, and economic prosperity of the nation.
The economic case for education is compelling. Educated and skilled individuals are generally better equipped to adapt to technological change, participate in higher-value economic activities and respond to changing labor-market demands. At the national level, education can strengthen labor productivity, innovation, entrepreneurship and institutional capacity. At the household level, it can expand employment opportunities, improve earning potential and enhance economic security. For Pakistan, however, the central challenge is that investment in education remains substantially below what is required to translate the country’s considerable human potential into sustained and inclusive economic prosperity. Pakistan has made measurable progress in several education indicators. According to the Pakistan Economic Survey 2025–26, the literacy rate increased from 61 percent in 2022–23 to 63 percent in 2024–25. School attendance also increased from 61 percent to 67 percent. At the same time, the proportion of children aged 5–16 who are out of school declined from 38 percent in 2023 to 28 percent in 2025. These improvements are encouraging, but the scale of exclusion remains enormous. The World Bank estimates that Pakistan has roughly 25 million children between the ages of 5 and 16 who are out of school, placing the country among those with the world’s largest out-of-school populations.
| Pakistan’s Education Snapshot | Indicator |
|---|---|
| Literacy rate | 63% |
| Male literacy | 73% |
| Female literacy | 54% |
| School attendance | 67% |
| Children aged 5–16 out of school | 28% |
| Education expenditure | Rs. 962 billion |
| Education expenditure as share of GDP | 0.8% |
| Source: Pakistan Economic Survey 2025–26. | |
The gender and geographical dimensions of the problem are particularly important. Literacy remains significantly higher among males than females, while rural populations continue to lag behind urban communities. According to the latest Economic Survey, urban literacy stood at 74 percent compared with 55 percent in rural areas, while female literacy in rural areas was only 44 percent. These differences demonstrate that Pakistan’s education challenge is not simply a shortage of classrooms. It is also a question of affordability, geographical distance, safety, social norms, household income, educational quality and the perceived economic value of schooling. When families face financial pressure, education may be viewed as a long-term investment whose benefits are uncertain, while the immediate opportunity cost of sending a child to school can be significant.
Perhaps the strongest indication of Pakistan’s education dilemma is the level of public expenditure. Education expenditure stood at approximately Rs. 962 billion in FY2025, equivalent to only 0.8 percent of GDP. This is particularly concerning because education competes with numerous immediate fiscal demands, including debt servicing, energy subsidies, defense, infrastructure and social protection. However, treating education as an expenditure that can be compressed during periods of fiscal pressure may create a much larger economic cost in the future through lower productivity, weaker human capital and reduced competitiveness.
| Education Expenditure as Share of GDP | Percentage |
|---|---|
| 2019–20 | 1.9% |
| 2020–21 | 1.4% |
| 2021–22 | 1.7% |
| 2022–23 | 1.5% |
| 2024–25* | 0.8% |
| Source: Pakistan Economic Survey 2025–26. FY2024–25 figure covers July–March and is therefore provisional. | |
The issue, however, is not merely how much Pakistan spends, but also how effectively those resources are used. Greater investment is necessary, but additional resources without accountability, measurable learning outcomes, teacher development and institutional reform may generate limited economic returns. Public spending should therefore be viewed through the lens of outcomes rather than allocations alone. One of Pakistan’s most important economic challenges is the disconnection between education and employment. A young person may spend years in an educational institution yet still lack the communication, analytical, digital, technical and entrepreneurial skills demanded by employers. This creates a paradox: Pakistan has a large and potentially productive young population, yet businesses frequently report difficulties in finding workers with the skills required for available jobs. The solution requires a shift from an education system focused primarily on credentials towards one focused on competencies. Technical and vocational education can play a critical role in this transformation. The Pakistan Economic Survey 2025–26 reports 4,746 technical and vocational institutes with enrolment of approximately 0.46 million students. Expanding industry-linked training, apprenticeships and professional certifications could help convert demographic growth into a productive economic advantage.
This chain is important because the ultimate economic return on education does not come from enrolment alone. It comes from learning. A child who attends school but fails to acquire basic literacy and numeracy does not receive the full economic benefit associated with education. Consequently, the quality of learning must become as important as access to schooling. Pakistan’s education debate often focuses on access: how many schools exist, how many children are enrolled and how much money is allocated. These indicators matter, but they do not tell the whole story. Learning outcomes are equally important. World Bank assessments have highlighted severe learning poverty in Pakistan, with nearly four out of five children unable to read and understand an age-appropriate simple text by around age ten. Pakistan therefore faces a double challenge: children who are not in school and children who are in school but are not learning enough. Economically, both situations represent lost human capital. The policy question should consequently move beyond “How many children are in classrooms?” to a more fundamental question: “What are children learning, and how will those skills improve their future productivity?”
The future economy will increasingly depend on digital technologies, artificial intelligence, green industries, advanced manufacturing, biotechnology, financial technology and knowledge-intensive services. Pakistan cannot compete effectively in these sectors with an education system designed primarily for an earlier industrial era. The country needs an education system that prepares students not only to enter existing occupations but also to adapt to emerging professions and changing labor-market demands. Universities have a particularly important role in this transformation, and faculty members are at the heart of this role. Faculty are not merely responsible for delivering course content; they shape students’ analytical abilities, professional competencies, research orientation and capacity to respond to real-world economic challenges. Well-qualified and professionally engaged faculty can connect classroom learning with developments in industry, introduce students to emerging technologies, encourage critical and innovative thinking, and guide them towards practical problem-solving. Continuous faculty development is therefore essential to ensure that teachers remain familiar with changing industry practices, digital tools, artificial intelligence and emerging fields of knowledge.
Higher education should not operate in isolation from the wider economy. Stronger university–industry linkages can help align curricula with market requirements, promote applied research and create opportunities for students to gain practical experience. Faculty members can serve as an important bridge between universities and industry through joint research, consultancy, internships, guest lectures, industry projects and professional collaborations. Universities can also contribute to entrepreneurship by supporting innovation centers, incubation programs, industry projects and research partnerships. For Pakistan, investing in faculty development alongside infrastructure and technology is therefore an essential component of building an education system capable of producing the skilled workforce required for a knowledge-driven economy. Bottom of FormDigital education provides another opportunity. Increasing internet access and digital connectivity can reduce geographical barriers and expand access to learning resources, online courses, professional training and digital entrepreneurship. However, technology should complement rather than replace quality teaching. Digital access without digital literacy, appropriate content and effective pedagogy may simply reproduce existing inequalities in a different form.
Pakistan therefore needs a smarter investment strategy for education. First, investment should prioritize foundational literacy, numeracy and early childhood development because weaknesses at these stages can constrain learning throughout a person’s educational journey. Second, financing should give greater attention to disadvantaged regions and communities rather than distributing resources uniformly. Third, teachers should be treated as a strategic investment, with continuous professional development, appropriate support and opportunities to improve classroom practices. Fourth, education policy should create stronger connections among schools, universities, technical institutes and industry. Fifth, digital infrastructure should be expanded alongside digital literacy and teacher capacity. Finally, education outcomes should become measurable indicators of public policy success. The objective should be not simply to spend more, but to ensure that each additional rupee generates a measurable improvement in learning, skills and economic opportunity.
The recent decline in the proportion of out-of-school children shows that progress is possible. However, the remaining gap requires sustained investment rather than temporary initiatives. Equity-oriented policies are particularly important because educational exclusion is concentrated among disadvantaged groups and regions. Targeted interventions can therefore produce greater social and economic returns than a one-size-fits-all approach. Pakistan’s most valuable economic resource is not simply its land, minerals or infrastructure. It is the capability of its people to create value from all of these resources. A child who learns to read becomes better equipped to learn throughout life. A student who acquires digital skills can enter new markets. A technically trained worker can improve industrial productivity. A university graduate who develops research and entrepreneurial capabilities can create solutions rather than simply seek employment. Education therefore generates returns that extend far beyond individual earnings. It can improve productivity, reduce inequality, support innovation, strengthen social resilience and enhance the country’s ability to compete in a rapidly changing global economy. The benefits also extend across generations: educated parents are more likely to recognize the value of schooling and invest in the education and well-being of their children, creating a cycle through which human capital can accumulate over time. The central question for Pakistan should consequently not be whether the country can afford to invest more in education. The more important question is whether Pakistan can afford not to. Every year of inadequate investment carries an opportunity cost in the form of unrealized skills, lower productivity, lost innovation and foregone economic opportunities. Investing in minds is investing in the economy itself. The classrooms of today are the workplaces, laboratories, enterprises and institutions of tomorrow. For Pakistan, turning education into a genuine economic investment is not merely a matter of social policy; it is a prerequisite for building a more productive, competitive and prosperous economy.
The author is is MD IRP /Faculty department of H&SS- Bahria University Karachi