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Thursday March 28, 2024

Investing in people

By Ali Ansari
December 19, 2018

In the past couple of weeks, two very prominent individuals – former finance minister, Dr Miftah Ismail, and the former dean of humanities and social sciences at LUMS, Dr Anjum Altaf – have presented different perspectives on the relationship between education and economic growth.

In his opinion piece in these pages (‘Educating Pakistan’, December 5, 2018), Dr Miftah Ismail argues that education is a critical factor in explaining the relative wealth of nations. Dr Anjum Altaf presents a counterargument based on cross-country evidence that reflects a weak relationship between literacy rates as a proxy for education and GDP per capita as a proxy for wealth to argue that there is ‘no simple correlation between education and wealth’ and that other more important factors account for economic growth (‘Miseducating Pakistan’, December 9, 2018). This [latter] article attempts to add to the debate and ultimately argue that education does have a relationship with economic growth, particularly for low-income countries, but this relationship is apparent when we look at more appropriate measures of human capital.

Dr Altaf’s assertion that there is no strong relationship between a country’s literacy level and economic growth makes sense when we unpack the link between human capital and economic growth. Human capital is essentially the accumulated knowledge, skills and expertise of an average worker in an economy, and education, training and experience are the means through which human capital is acquired. The human capital theory postulates that increasing labour productivity increases human capital, which in turn will lead to higher levels of economic growth.

Given these definitions, and the dichotomous nature of literacy (ie you are either literate or not), it is understandable why literacy rates are not a robust measure of a country’s human capital; they do not capture the extent to which a country is ‘educated’. Similarly, using educational attainment levels as a proxy for human capital may not be appropriate either. This is because more education does not necessarily mean more learning is taking place. Recent evidence from countries such as India and Indonesia reflect this very phenomenon. Both countries have experienced an increase in enrollment rates, while learning outcomes have stagnated or even deteriorated during the same period. Therefore, in order to determine whether there is a link between education and economic growth, we need to look beyond measures of literacy and years of schooling.

A more reliable approach to measure human capital is to look at learning levels, which provide insight into the cognitive abilities of a population. Imparting education that enhances and challenges the cognitive abilities of students is critical to increasing labour productivity and creating a workforce that has the capability to innovate, problem solve, think critically and adapt to new technologies and circumstances. And there is some evidence from the Program for International Student Assessment (PISA) which reflects that for countries with GDP per capita of $20,000 or less, higher GDP per capita is associated with higher student test scores. The report also highlights that countries with higher levels of GDP per capita have a weaker relationship between GDP per capita and student test scores.

So what does all this mean for Pakistan? First, it means acknowledging what Dr Miftah Ismail has said about the catalytic role of education and skills training in spurring economic growth. Given the fiscal constraints the country is currently facing, and the government’s push for austerity, this means there should be no compromise on ensuring adequate financing for the social sectors. However, even more important than spending more on education is deciding what to spend on.

Provincial governments must ensure that development schemes are properly appraised, and schemes that have the greatest potential to achieve desired higher level outcomes are prioritised instead of the usual political schemes such as distributing free laptops to students. Utilising the development budget in the education sector has been a challenge across the provinces, and the track record of the respective C&W departments of constructing classrooms and facilities in a timely, cost effective manner has also been poor. We need quick solutions that significantly reduce these inefficiencies.

Second, we must also recognise Dr Altaf’s argument that money alone will not improve education in Pakistan. It is not simply a case of expanding access to education. Issues pertaining to poor governance which have plagued the sector must be addressed if we are serious about reform. The committee tasked with revamping the civil service and government institutions headed by Dr Ishrat Hussain must come up with concrete solutions that can help address governance-related challenges. Some of these challenges that require further deliberation include defining the roles of and empowering district education authorities (or their equivalent), attracting the right talent to take on these roles, and exploring the extent to which decision-making can be devolved to lower administrative levels.

In Punjab, the district education authorities have been in place now for a couple of years, however aside from a change in job titles, there has been minimal change, and the true spirit of decentralised management is yet to materialise. This is one reform that is also in line with the PTI government’s promise to empower local governments, and is an opportunity for the provincial government to demonstrate that there are committed to decentralised management.

Lastly, there is a need to ensure that interventions that improve the quality of education are prioritised, to build a more productive workforce that can help generate economic growth and boost prosperity for the citizens of Pakistan. Here teachers play a central role and we need a structural shift in our approach to hiring, incentivising and training teachers. This will attract the right talent to the teaching profession, establish clear expectations of teachers and hold them accountable and reward them on the basis of these expectations, and provide tailored support to teachers for their professional development (rather than the one-size-fits-all approach that is currently in place).

If we don’t act now and only focus on whether children show up for school, and how many inspection visits are carried out by various officials, we will find ourselves in a situation that many developing countries are far too familiar with – lots of kids in school, but very little learning taking place.

The writer is an education economist, and PhD candidate at the University of Cambridge.