In 1998, the “Pakistan Development Review’s” Zafar Iqbal and Ghulam Mustafa Zahid worked on the “Macroeconomic Determinants of Pakistan’s Economic Growth.” The study investigates how some of the most important microeconomic factors, including education, physical development, and the budget deficit, affect Pakistan’s economic growth. The years 1959–1960 and 1996–1997 were examined using a multiple regression technique.
Primary education and economic openness are crucial elements for boosting growth, according to quantitative research. On the other side, production and inflation are adversely correlated with the budget deficit. The study also demonstrates that since external debt is also negatively correlated with growth, our best bet is to concentrate on domestic capital for financing. The study focuses on developing long-term economic growth policies in order to maintain economic development.
The results show a favourable correlation between real GDP growth and per capita income and the labour force participation rate for elementary school enrolment. It has been determined that primary education is Pakistan’s growth’s cornerstone. It seems ridiculous that the government should make every effort to give everyone who is of school age and desires it a basic education before starting down the path of economic progress. It has also been demonstrated that physical capital, such as infrastructure, has a crucial role in all forms of growth.
The tests find a correlation between economic openness—defined as being open to goods imports and exports—and growth. However, the analysis also shows that the budget deficit, along with external debt, is the most hazardous factor affecting economic growth, suggesting that reducing the deficit by reducing non-development spending and using solely domestic capital to enhance finances is our greatest chance for economic growth.
Van Der Sluis, Mirjam Van Praag, and Wim Vijverber’s 2004 study, “Entrepreneurship Selection and Performance: A Meta-analysis of the Influence of Education in Less Developed Countries,” provides an empirical analysis of how education affects entrepreneurship selection and how it affects less developed countries. Additionally, data shows that a marginal year of schooling results in a 5.5% rise in firm earnings. The amount of agriculture in the economy, gender, and place of residence in the economy all affect these returns differently.
More skilled employees frequently take wage employment and work in non-agricultural industries rather than farming. Skilled women are more likely to choose paid work than self-employment.
In Pakistan, the female literacy rate is still low when compared to the male rate. Women participate in society less than males do. Due to societal and cultural constraints, women in Pakistan have a poor standing, particularly in rural regions. One of Pakistan’s most peculiar characteristics is that, in some areas, especially in the northern tribal regions, the family is opposed to girls’ education. Baluchistan and NWFP are the regions with the worst conditions.
Women have a literacy rate of 3-8%. There are many groups that have established such schools in the educationally accessible places. Unfortunately, the government in these areas has not taken any action to promote literacy for the education of girls. The advantages of completing more years of education are greater for urban and developing-nation women. The findings also demonstrate that illiterate women are primarily employed in low-wage industries like food or textiles. This suggests that education enables women to work in higher-paying environments.
In 2004, Mamoon Dawood’s dissertation from the Institute of Social Studies was also quite important. The study makes a very important point about Pakistan’s educational strategy. While neglecting the basic education sector, it examines the effects of increased government spending on Pakistan’s higher education sector on the growth of Pakistan’s economy.
Like every other industrialised nation, we prioritise higher education over basic school in our educational approach. Higher education produces trained workforce that generates higher returns when compared to investment in the primary education sector. These incentives are made possible through international trade, which is crucial for all emerging nations. By widening the gap between skilled and unskilled labour, this leads to an extremely unbalanced economy, much like the one India is currently experiencing.
According to the study’s findings, the government of Pakistan needs to take a very balanced approach to spending on both primary and higher education if it is to address the issue of inequality. Like every other industrialised nation, we prioritise higher education over basic school in our educational approach. Higher education produces trained workforce that generates higher returns when compared to investment in the primary education sector. These incentives are made possible through international trade, which is crucial for all emerging nations. By widening the gap between skilled and unskilled labour, this leads to an extremely unbalanced economy, much like the one India is currently experiencing.
Mohsin S. Khan conducted study on “Human Capital and Economic Growth in Pakistan” in 2005. The study looks at the variables influencing Pakistan’s relative economic development. The study focuses what Pakistan has done to accomplish the rapid growth and what it has overlooked that has placed it behind other more excellent countries. Although Pakistan’s economy has developed more quickly than other low- or middle-income countries in South Asia, some others have fared much better.
In addition to the other obvious components, the focus of this essay is on the role of variations in human resource quality and how they affect the economic growth factor. Here, particular emphasis has been placed on four variables related to human resources, the buildup of physical capital, institutional effectiveness, health care, and education. Here, the independent variables are these four variables, and the dependent variable is human capital. Economic development is then the dependent variable, whereas human resources is the independent variable.
These four variables have a significant influence on how human capital develops, and economic growth is influenced by human capital development. The improvement of each of these four factors adds to the improvement of the nation’s economic growth because these factors have a positive relationship with the development of human capital and that relationship has a positive link with economic growth. Developing institutions and increasing investment remain crucial levers for attaining economic growth, but economic growth is higher in nations that spend more in human capital.
Three researchers—Michelle Riboud, Yevgeniya Savchenko, and Hong Tan—conducted a study titled “The Information Economy and Education and Training in South Asia” in 2007. This study evaluates the potential impact of education and training in human resource-rich nations on emerging nations in terms of job creation, sustainable growth, productivity, and poverty reduction. The expansion of talents in South Asian nations and how they affect the job market are both taken into consideration in the study. Here, developing skills necessitates educating and preparing people.
The main goal of the analysis is to track and compare changes in South Asian training and education, as well as to track changes in their incomes and employment. The study makes use of labour force, company, and family surveys from the 1090s to the present. In contrast to East Asian nations and other regions, the study places a greater emphasis on Pakistan, Sri Lanka, India, and Bangladesh.
In some instances, it may be seen that the educational divide between East Asia and South Asia may widen rather than close. Additionally, it comes to the conclusion that this has led to uneven and biassed country development. In this region of the world, there has always been unequal progress in education regarding gender equality, but this inequality has only significantly lessened in basic education, and much more work needs to be done to close this gap in the secondary or higher education sectors. Given the demand for highly qualified workers, authorities should carefully consider the availability of education and training.
A study on “Wage Differentials, Rate of Return to Education, and Occupational Wage Share in the Pakistan Labor Market” was conducted later that same year by Asma Hyder of the Pakistan Institute of Development Economics. This national study on the labour force collects data on demographics and employment from all throughout Pakistan. The inter-sectoral earnings of the three main economic sectors—private, state-owned, and public—are evaluated. To determine the wage disparity in human resources, the rate of return from various educational levels is examined.
One of the key factors affecting wages is education, and Pakistani citizens’ educational gaps can be significantly decreased in order to close both the wage and poverty gaps.
The Role of Trade, External Debt, Labor Force, and Education in Pakistan’s Empirical Evidence of Economic Growth Using the ARDL Approach was the subject of Arshad Hasan and Safdar Butt’s 2008 research project. This study used the co-integration method of the Autoregressive Regressive Distributed Lag to examine the elements that contributed to Pakistan’s economic growth between 1975 and 2005. (ARDL). The relationships between economic growth, trade, labour, and education, as well as the short- and long-term effects of these relationships, have been discussed. Some of the factors influencing Pakistan’s economic development include human capital, total commerce, external debt, and education.
Numerous theoretical growth models, such as those proposed by Lucas (1988), Becker, Murphy, Nelson and Phelps (1966), Rebelo (1992), Tamura (1990), Sala-i-Martin and Mulligan, have been developed throughout the years (1992).
In order to achieve economic growth, human capital must grow. And the most important factor in developing human capital is education. As a result, education is closely related to economic development and plays a significant part in it. Research in the past has predicated that education raises a person’s capital stock, which raises their productivity and eventually supports growth. However, Bils and Klenow (2000) approach the issue differently and discover that varying degrees of education are positively correlated with varying rates of growth.
The study’s results do, however, point to a strong correlation between a nation’s labour force, trade, and economic growth. Economic growth has been demonstrated to be correlated with external debt. This demonstrated that economic development in our nation has not been properly utilised, which may be one of the causes of the economy’s sluggish growth. A highly efficient work force, sufficient debt flow, and trade will all contribute to and hasten the process of growth.
A report on the impact of higher education on Pakistan’s economic development was later produced in 2010 by Babar Aziz, Tasneem Khan, and Shumaila Aziz. The Cobb-Douglas output function is estimated and used in the study to evaluate the impact of higher education on Pakistan’s economic growth from 1972 to 2008. The enrollment of students in higher education has been investigated to see whether their presence impacts the effectiveness of the work force, which in turn influences economic development. This paper establishes that one of the most important factors in the labour market is education and takes the findings of the International Labor Office into consideration.
Another key factor in driving economic growth is the impact of higher education on GDP changes. To determine the effects of higher education on Pakistan’s economic development, GDP is used as the dependent variable. Higher education, registration, and GDP are also covered as dependent and independent factors in the analysis.
The study comes to the conclusion that higher education is positively affecting Pakistan’s economy’s growth. Higher enrollment rates among students suggest more trained workforce, which boosts GDP in turn. However, increasing education spending is necessary to encourage students to enrol in higher education, leading us to draw the conclusion that these three factors—education spending, higher education enrollment, the availability of a skilled labour force, and GDP—are all positively correlated and play a significant role in the development of Pakistan’s economy.
Each state should devote time and resources to the education sector in order to strengthen its economy, according to all studies that link education and economic growth. Despite the fact that there have been several studies in this area, it is still difficult to conduct research and draw conclusions since the data availability falls short of Pakistan’s aspirations. There is still much work to be done in this area to enable decision-making that is more exact and precise. However, even with the facts at hand, we can be certain that more work has to be done in the education sector in Pakistan in order to achieve long-term economic growth and prosperity.