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Zafar Iqbal and Ghulam Mustafa Zahid from the ‘Pakistan Development Review’ worked on the ‘Macroeconomic Determinants of Pakistan’s Economic Growth’ in 1998. The study explores the effect on Pakistan’s economic growth of some of the most significant microeconomic variables, such as education, physical growth and the budget deficit. A multiple regression method was used to analyze the period between 1959-60 and 1996-1997.
According to quantitative evidence, primary education and economic openness are essential factors for accelerating growth. However, the budget deficit, on the other hand, negatively linked to production and inflation. The study also shows that our best shot is to focus on domestic capital for finance, as external debt is also negatively linked to growth. In order to maintain economic development, the study focuses on coming up with long-term economic growth policies.
The findings indicate that real GDP growth and per capita income have a positive relationship with the labor-force ratio for primary school enrollment. It is concluded that primary education is the foundation stone for Pakistan’s growth. It is cretinously that the government should make every effort to provide everyone of age who wants it with primary education and then it can go off to the road of economic development. It has also been shown that physical capital is also a significant part of growth in any form, such as infrastructure.
The tests also conclude that economic openness has a positive relationship with growth, meaning openness to imports and exports of products. On the other hand, the study also indicates that the most dangerous factor affecting economic growth is the budget deficit, along with external debt, which suggests that lowering the deficit by cutting non-development spending and using only domestic capital to boost finances is our best shot for economic growth.
The 2004 research ‘Entrepreneurship Selection and Performance: A Meta-analysis of the Influence of Education in Less Developed Countries’ by Van Der Sluis, Mirjam Van Praag and Wim Vijverber offers an empirical view of the impact of education on entrepreneurship selection and the impact on less developed countries. It also indicates that a marginal year of education increases the company’s profits by 5.5%. Such returns differ by residence in urban rural areas, gender and the amount of agriculture in the economy.
More trained workers often end up in wage jobs and tend to do non-farm business instead of farming as well. Instead of self-employment, skilled women are more inclined towards wage employment.
The rate of female literacy in Pakistan remains poor compared to male literacy. Women have a poor proportion of social activity. The status of women in Pakistan is poor, especially in rural areas, because of social and cultural barriers. One of Pakistan’s strangest aspects is that the family is against educating girls in some places, particularly in northern tribal areas. The situation is most serious in NWFP and Baluchistan. The literacy rate for women is 3-8%. In the areas that provide education, several organizations have opened such schools. Unfortunately, in these regions, the government has not taken any steps or measures to encourage literacy for the education of girls. For women in developing countries and those living in urban areas, the benefits of additional years of schooling are greater. The results also show that uneducated women are mainly working in low-income sectors such as food or textiles. This implies that education allows women to work in a higher income setting.
The dissertation of Mamoon Dawood from the Institute of Social Studies was also of particular significance in 2004. The study raises a very significant argument regarding Pakistan’s education policy. It studies the impact of increased government spending on Pakistan’s higher education sector on the development of Pakistan’s economy, while ignoring the primary education sector.
Like every other developed country, our education strategy is to spend more and more on higher education at the cost of primary education. Compared to investing in the primary education market, higher education creates skilled labor that reaps higher rewards. Via foreign trade, which is very important for every developing world, these incentives are achieved. What this does is establish a wider divide between skilled and unskilled labor, leaving the economy in a very unbalanced situation like the one India is currently facing.
The study concludes that in order to solve the problem of inequality the government should have a very balanced approach towards spending in both the primary and the higher education in Pakistan. Like every other developed country, our education strategy is to spend more and more on higher education at the cost of primary education. Compared to investing in the primary education market, higher education creates skilled labor that reaps higher rewards. Via foreign trade, which is very important for every developing world, these incentives are achieved. What this does is establish a wider divide between skilled and unskilled labor, leaving the economy in a very unbalanced situation like the one India is currently facing.
In 2005, Mohsin S. Khan researched the subject of ‘Human Capital and Economic Growth in Pakistan’. The paper examines the factors explaining the relative growth of Pakistan. The economy of Pakistan has developed faster than other low- or middle-income countries, but some others have done much better in South Asia, the paper emphasizes what Pakistan has done to achieve the rapid growth and what it has ignored that has left it behind other more excellent countries. This paper focuses on the role of differences in the quality of human resources and its effects on the economic growth factor, in addition to the other obvious factors. Four variables with respect to human resources, the accumulation of physical capital, the efficiency of institutions, health care and education have been given special importance here. Here, human capital is the dependent variable, while the independent variables become these four variables. Then the dependent variable becomes economic development, and the independent variable becomes human resources.
These four factors have a profound impact on human capital development, and human capital development contributes to economic growth. These variables have a positive relationship with the development of human capital, and the development of human capital has a positive relationship with economic growth, which means that improving each of these four variables contributes to improving the economic growth of the country. The obvious reality remains that developing institutions and growing investment are critical keys to achieving economic growth, but that economic growth is greater for countries that invest more in human resources.
The research ‘The Information Economy and Education and Training in South Asia’ was conducted in 2007 by Michelle Riboud, Yevgeniya Savchenko and Hong Tan. This study assesses how education and training in human resources countries can have far-reaching consequences for developing countries in terms of job creation, sustainability of growth, productivity and poverty reduction. The study takes into account the growth of skills in South Asian countries and how the effects of the labor market are affected. Here, ability acquisition requires both educating and preparing individuals.
The main objective of the analysis is to record and compare developments in training and education in the area of South Asia and to observe the shifts in earnings and jobs purchased by them. The research uses surveys of families, business levels and labor force from the 1090s to recent years. The study focuses primarily on Pakistan, Sri Lanka, India and Bangladesh, compared with East Asian countries and other areas.
In some cases, it can be seen that the difference between East Asia and South Asia in terms of education can expand rather than close. It also concludes that countries’ development has been unequal and skewed in this regard. There has always been unequal improvement in education in terms of gender equality in this part of the world, but this disparity has decreased dramatically only in primary education, and a great deal of work needs to be done to address this gap in the secondary or higher education sectors. Highly skilled labor is in demand and policymakers should pay careful attention to the availability of education and training.
Later in the same year, Asma Hyder of the Pakistan Institute of Development Economics conducted a study of ‘Wage Differentials, Rate of Return to Education, and Occupational Wage Share in the Pakistan Labor Market’. This labor force survey is a nationwide survey containing data on demographics and job information from all over Pakistan. It assesses the inter-sectoral earnings of the three major sectors of the private, state-owned and public economy. The rate of return from various stages of schooling is analyzed in order to observe the pay difference in human resources.
Education is one of the most important variables that influence the wage gap and the wage gap and poverty gap can be substantially reduced by reducing the educational gap of the people of Pakistan.
Arshad Hasan and Safdar Butt worked on ‘The Role of Trade, External Debt, Labor Force and Education in Pakistan’s Empirical Evidence of Economic Growth Using the ARDL Approach’ in 2008. This paper studies Pakistan’s economic growth factors over the period 1975-2005, using the co-integration method of the Autoregressive Regressive Distributed Lag (ARDL). The ties between economic growth and external debt, trade, labor and education, along with their short-term and long-term consequences, have been addressed. Education, total trade, external debt and human capital are some of the determinants which affect Pakistan’s economic development.
Many research on economic growth have been performed before and there are many theoretical growth models, including Lucas (1988), Becker, Murphy, Nelson and Phelps (1966) and Rebelo (1992), Tamura (1990) and Sala-i-Martin and Mulligan (1992).
It is the growth of human capital in order to achieve economic growth. And education is the most critical aspect of building human capital. Therefore, education plays a major role in a country’s economic development and is directly connected to one another. In the past, research has assumed that education increases the capital stock of human beings, which enhances their productivity and ultimately contributes to growth. However, Bils and Klenow (2000) take the problem differently and find that different levels of education are associated positively with different growth rates.
However, the findings of the study suggest that a very positive relationship exists between a country’s labor force, trade and economic development. External debt has been shown to be related to economic development. This also showed that economic development in our country has not been used correctly and that this may also be one of the reasons for the country’s slow economic growth. The combination of sufficient debt flow, trade and a highly efficient labor force will contribute to growth and speed up the process of growth.
Later, in 2010, Babar Aziz, Tasneem Khan and Shumaila Aziz carried out a report on the effect of higher education on Pakistan’s economic development. The study estimates and uses the Cobb-Douglas output function to assess the effect of higher education on Pakistan’s economic growth from 1972 to 2008. In order to assess whether their enrollment affects the efficiency of the labor force, which in turn affects economic development, the enrollment of students in higher education has been studied. The results of the International Labor Office are taken into account in this report, which establishes that education is one of the most significant measures in the labor market.
The influence of higher education on changes in GDP is also seen as a very significant driver of economic development. So, GDP is taken as the dependent variable to see the returns of higher education on Pakistan’s economic development. The analysis also discusses higher education, registration and GDP as variables that are both dependent and independent.
The study concludes that higher education is having a positive influence on the development of Pakistan’s economy. Student participation in higher education implies more skilled labor, leading to a positive effect on GDP in turn. But education expenditure has to increase in order to get students to enroll in higher education, which allows us to conclude that these three variables, education expenditure, higher education enrollment, and the availability of a skilled labor force and GDP are all positively linked and are a very important determinant of Pakistan’s economy’s growth.
All studies show that education and economic growth have a clear positive relationship, and every state should invest time and money on the education sector in order to gain economic strength. Although there have been many studies in this regard, the reality remains that the availability of data is not up to Pakistan’s expectations and it poses many difficulties in carrying out a study and coming to a conclusion. In order to be able to make more accurate and precise decisions, a lot of work needs to be done in this regard. But we can be sure, even with the data available, that a great deal of work needs to be done in Pakistan’s education sector in order to achieve sustainable economic growth and prosperity.
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