‘Pakistan demography ideal for economic growth, needs planning’

[LahoreEstate]

Sunday, February 21, 2010
By Mansoor Ahmad

LAHORE: The country’s demographic divide is both a threat and an opportunity as it would much depend on how planners nurture its 63 per cent human resource that is less than 25 years old.

Economists point out that enriching human capital is vital for economic growth. They cite the example of East Asian economies in this regard most of which lack natural resources but had better human capital that enabled them to outpace South Asian economies from similar level of economic development in 1960.

Their huge human capital endowments, both in terms of education and health were the main reason for this growth.

Senior economist Naveed Anwar Khan said in the early 1960s for example per capita income of Pakistan was more than double, that of South Korea. “Now our per capita income is only $980 while that of South Korea is $21,530.” He said the reason for this divergence is that literacy rates 1960s were as high as 71 per cent for the Republic of Korea, and 68 per cent for Thailand, while Malaysia achieved a rate of over 50 per cent.

On the other hand he added South Asian developing countries, the literacy rate were low; only 9 per cent for Nepal and 16 per cent for Pakistan.

After almost five decades the literacy rate has improved officially to around 60 per cent in Pakistan that is still lower than the literacy rate of Korea in 1961. On the other hand the literacy in South Korea reached 98 per cent and Malaysia managed a rate of about 90 per cent, he added.

Social worker Dr Kishwar Dhingra said expenditures on education, training, medical care, and so on are investments in human capital. Schooling, a computer training course, expenditures on medical care, and lectures on the virtues of punctuality and honesty are also capital, she added.

That is because they raise earnings, improve health, or add to a person’s good habits over much of his lifetime, she said. Dr Dhingra said measured by life expectancy at birth across the South Asian and East Asian economies show that life expectancy is much higher in the later region. In the 1960s she added, life expectancy at birth was below 45 years in South Asian countries. On the other hand she revealed the East Asian developing countries had life expectancies well over 50 years, with the Republic of Korea achieving a figure of over 54 years, followed by the 53 years of Malaysia and 51 years for Thailand.

She said currently South Asian developing countries have enhanced their life expectancy to more than 63 years, at least in the case of Pakistan, India, Bangladesh and Bhutan. Yet the life expectancy rate in both Malaysia and Korea remains much higher; of the order of more than 76 years, with Thailand reaching a figure of 70 years She said the demand for human capital is derived from the production function and profit maximizing behavior, but the supply of human capital is typically dominated by non-profit organizations, especially the state.

Faisal Qamar ACA said Pakistan is fortunate that the proportion of working age population is increasing in the country. It is reverse in most developed economies he added. He said if the available human capital of the country is not empowered with knowledge based education and health care “we would remain a low income country after another 50 years.”

He said evidence covering many years is now available from more than a number of countries with different cultures and economic systems that show high school and college education coupled with adequate state provided health care facilities greatly raise a person’s income, even after netting direct and indirect costs of schooling, and even after adjusting for the fact that people with more education tend to have higher IQs and better-educated, richer parents.

He said the earnings of more-educated people are almost always well above average, although the gains are generally larger in less-developed countries.

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