Revitalizing Pakistan’s Prosperity through Educational Investment

OpinionRevitalizing Pakistan's Prosperity through Educational Investment

By  Anosha Bukhari.

In recent years, Pakistan has found itself facing high financial risks and economic problems that have caused international repercussions.  As we delved deeper into the intricacies of financial issues, a resounding truth emerged: Investment in education plays an important role in supporting economic growth.


Pakistan’s consumer price increase in December 2023 was a staggering 29.7% compared to the same month last year more than a year since inflation rose above 20%. However, it is hopeful that inflation increased by only 0.8% in December compared to November. This encouraging change can be attributed to the tight monetary policy implemented by the State Bank of Pakistan (SBP), which was successfully initiated to eliminate excess liquidity. The crux of the problem is that the national budget deficit has swelled in recent years.

To close this gap, the government spends more money, which causes revenue to increase. As a result, inflation became unsustainable, weakening the country and undermining economic stability. A simple example can be taken from a hypothetical market consisting of three sellers and three buyers who each exchange some money for a food parcel. In this case, prices will rise as the government puts more money into the hands of consumers, with no connection between the goods sold. This strikingly demonstrates the reality of Pakistan’s economy.

The main reason for inflation is the government’s inability to manage the budget deficit. As discontent grew, the government was forced to print more money. To solve the problem, the Swiss National Bank raised interest rates, effectively restricting private lending. However faced with high interest rates and rising payments, the government found it difficult to control the fiscal deficit, thus increasing the fiscal cycle. An important aspect of this economic problem is investment in education, which is the key to economic growth.

Pakistan’s income has increased by more than 100% in the last five and a half years; This points to the urgent need for investment to increase the country’s productive capacity. In a country where approximately 58% of children under 5 are stunted or 78% of 10-year-olds struggle with basic reading skills, powerful learning produces call-to-action products. Economists believe economic growth is associated with progress in labor, capital, and technology (such as education, skills, and knowledge).

But unfortunately, education is not a priority in Pakistan. The growth of the nonprofit sector over the past two decades has been driven by an increase in employment with minimal advancement in skills or knowledge. For the country to get out of the negative growth cycle, investment in education should be the principle of economic policy.
The impact of investment in education on productivity and economic growth cannot be overstated. As the government allocates resources to improve education, workers become more efficient and productive, increasing productivity. This increased the country’s production capacity, allowing it to meet the increasing demand for goods and services without increasing prices.

The facts about the current situation in Pakistan show the urgency of this need. Considering the population growth and education gap, the country is at an important crossroads. Allocating resources to education will not only solve the urgent problem of inflation but also pave the way for economic growth. In our hypothetical economy, the comparison would be clearer – if the number of food products doubled because income doubled, prices would not rise.

Likewise, if Pakistan can increase its production of goods and services while increasing its currency, it can prevent inflation. Also, the right way to invest in education may depend on the fiscal policy implemented by the SBP. While increasing interest rates aims to limit the need for raising money and borrowing from the private sector, it also aims to simultaneously invest in education and send the reported income to areas that will develop the country’s human capital. Fighting inflation and supporting economic growth requires a multifaceted approach. Reducing the fiscal deficit is important, but must be combined with plans to invest in education to create skills and competitiveness. A country cannot achieve success without supporting the ideas and talents of its citizens.
As Pakistan grapples with its economic problems, it must resist the temptation to deviate from its economic policies. Relief may be provided in the short term, but the long-term consequences may be harmful. The most important thing is to implement a balanced strategy: reduce the budget deficit, invest in education, and maintain a flexible, market-oriented exchange rate to support exports.

In summary, the key to Pakistan’s path to economic success lies in the realization that education is a catalyst for growth. By investing in human resources, countries can escape permanent fiscal constraints and foster a prosperous, productive economy. It is time for change and the profits from investments in education will undoubtedly shape the future of Pakistan.

Note: The writer is a Student of the International Relations Department of the University of Azad Jammu and Kashmir.


The views and opinions expressed in this article/Opinion/Comment are those of the author and do not necessarily reflect the official policy or position of the DND Thought Center and Dispatch News Desk (DND). Assumptions made within the analysis are not reflective of the position of the DND Thought Center and Dispatch News Desk News Agency.

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