Role of Education and HRD in Economic Growth

With Special Reference to Pakistan.

Lecture By: Aslam Khokhar

Role of Education and HRD in Economic Growth

Economic growth is a process whereby the real national income of a country continues to increase persistently and if the rate of economic growth is higher than the rate of population growth, the Per Capita Income would also tend to rise, hopefully leading to economic development. For an agrarian developing country like Pakistan, there are several determinants of economic growth, such as physical capital formation, technological advancement, sound economic planning, land reforms, foreign direct investment (FDI) and provision of social capital. However, almost all development experts assign pride of the place to human resource development (HRD) as the key determinant of economic growth. Granted the existence of other factors, the sustainable growth not only originates from human resource but the end-all of economic growth is also the material welfare of the people who are the human resource themselves.

Role of Education and HRD in Economic Growth

Human resource of a country is equal to the sum total of quantity and quality of its workforce. The quality aspect of the workforce is even more important compared to its quantity. Indigenous quantity of workforce of Saudia and all Gulf States is many times more than that of Israel yet in balance the human resource of Israel is greater simply because of the excellence of quality of its workforce. Quality of human resource means the degree of technical skill which is the product of education which metamorphoses the workers into human capital. In their narrow commercial pursuits the business entities aim at maximum possible profit within the shortest possible time; however, it is by the dint of their consistent human resource development that the businesses can ensure a sustainable long-term profitability for themselves.

Role of Education and HRD in Economic Growth

Kenneth P. Morse, the founding managing director of MIT Entrepreneurship Center (USA) once remarked that although he had been a serial entrepreneur, he never consumed himself in studying business plans, rather he believes in investing on the workers. China, Japan and emerging industrial giants of East Asia have made phenomenal progress by way of heavily investing on education and technical skills of their people. High-tech machines coupled with skilled, satisfied and dedicated workers can bring about miracles and the resultant synergy can ensure long-term economic growth and sustainable development. Besides being a fundamental human right the basic education is a merit good and its social benefits far exceed the private benefits; it has positive effects on several other socio-economic variables of a society.

Role of Education and HRD in Economic Growth

Pakistan is the sixth most populous country of the world and it should have possessed a great human resource but it has not performed well in education and HRD because of low priority assigned to this vital determinant of economic growth. Even at present the allocation for education is petty 2.5 % of GDP. We are living in a fastly changing world where quality of human resource is vital to accelerating economic growth and alleviation of poverty. According to Hashim Abro, a developmentalist and a prolific writer of Pakistan:

Role of Education and HRD in Economic Growth

the Government needs to establish a comprehensive education system. The overall quality of higher education remains a concern due to lack of funds, shortage of competent teachers, and weak management and supervision.Education being provided in our universities is not strongly linked to market demand. There is also inadequate focus on science and technology and on areas that produce marketable skills. Any nation that does not possess the ability to obtain and process vast amount of information quickly will lag behind in development. Pakistan can easily double or even triple the foreign exchange remittances from expatriate workers by investing and focusing a little more on technical and science education, human resource development and language training. The country needs skilled technicians, data entry clerks, professional managers, accountants, computer programmers, IT consultants, bio-technicians, architects, designers and corporate lawyers. In our world, knowledge is not only power but it is also for sale. Almost every large company that relies upon remote transactions is hiring most cost-effective labor overseas; as such, the stock and quality of human resource has become a key for less developed countries like Pakistan to enable itself to participate in the global growth process, to reduce poverty and to attain a better quality of life.

The Knowledge Economy:

Level of skills obtained by a countrys workforce, degree of technological advancement and capacity to innovate, all these three added together are called knowledge level of an economy. In todays world of science and technology a countrys productive potential is directly related to its knowledge level. Now, the WorldBank is assessing the productive potential and economic growth of different countries on the basis of knowledge economy index (KEI) which is the most modern tool of inter-country comparison. The Banks studies reveal that South Asia as a region and Pakistan within this region have performed particularly poorly with respect to KEI. As a measuring rod the KEI ranges from zero to ten; the poorperformance countries are closer to zero and those performing well are closer to ten. In 1995 the KEI of India was measured at 4.02, the highest among South Asian countries and Pakistan ranked third after India and Sri Lanka at 2.82. In a decade following 1995 Pakistans KEI has further deteriorated due to misplaced priorities, lack of good governance, lack of meritocracy and lack of commitment of state institutions.

The Knowledge Economy:

According to Shahid Javed Burky, the Government of Pakistan needs to focus on at least two areas of public policy: (i) Education and (ii) Research & development. He wrote that: it is now well recognized that educated and skilled people are key to not only creating knowledge but also sharing and disseminating it. There is a need not only to get all children to attend school and stay in the class to acquire basic knowledge, there is also the need to improve secondary, higher and technical education.

The Knowledge Economy:

In Pakistan the major organizations responsible for HRD are National Commission for Human Development (NCHD), Higher Education Commission (HEC) and vocational training institutions. Of late, the Employerled Skill Development Council has also been established. Keeping in view the poor KEI of Pakistan , the overall performance of all the above mentioned institutions has been anything but satisfactory. As the major institution in the field, NCHD has to supplement its mandate with the following responsibilities after the completion of necessary legislation and legal requirements:

The Knowledge Economy:

a) It should collect, process and maintain a complete data base about employment opportunities for qualified and technical manpower. For this purpose it will have to coordinate with all ministries and private organizations. It must notice that service industries like hotels and banks are the fastest growing industries with large capacity of human resource absorption. b) It should coordinate with universities, the Government and private organizations for job placement. It should also carry out industry analysis to determine their present requirement of human resource.

The Knowledge Economy:

c) Within its ambit, it should establish a special cell which would be empowered to recommend the provision of small loans from micro-finance institutions so that if trained persons cannot find suitable employment, they may establish their own small businesses. As such, the deserving skilled young men would grow as entrepreneurs.

The Knowledge Economy:

d) With its extended mandate the NCHD shall assess future requirement of human resource through strategic forecasting and planning. This would also help the educational and training institutions to redesign their courses, if necessary, to cope with the skill-needs of industries. To conclude, it must be re-asserted that economic growth and peoples welfare are essentially linked with the spread of education and human resource development.

[This note is partly abridged from newspaper essays]

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