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32
Introduction
HRD plays a crucial role in enhancing firm level productivity
and ultimately, a country's national income. HRD policies
mainly include education, skill development, and health facilities
available to working age population and prudent labour market
laws and regulations (OECD 2012). Each component of HRD
policies is important for developing enabling environment for
domestic and foreign enterprises to lure additional investments as
well as attract technological advancements for increased
competitiveness. The political economic milieu, initial
endowments of factors of production, and institutional stability
across government and non-government institutions play an
important role in enhancing the quality of human capital.
The impact HRD policies provide coherence between programs
at national and sub-national levels. Equally important is to
synchronize the public sector investments in HRD. In the initial
phases of development, these scarce budgetary resources should
be targeted to sectors or regions with high impact in the shortest
possible time.
Figure 1: Education and Health Spending
(asPercentage of GDP)
India
Srilanka
Bangladesh
USA
Japan
Brazil
South Africa
Pakistan
17.9
20.0
15.0 11.1
9.3 8.9 8.1
10.0
2.5 3.9 3.4 3.7
5.0
0.0
Germany
7.0
5.6 5.86.0
6.0 5.1
5.0
3.8
3.3
4.0
2.4 2.02.2
3.0
2.0
1.0
0.0
Germany
USA
Japan
Brazil
South Africa
Pakistan
India
Srilanka
Bangladesh
% of GDP
Germany, USA and Japan spend around 5.1, 5.6 and 3.8 percent
of GDP respectively whereas, middle income group economies
like Brazil and South Africa spending on education as percentage
of GDP is around 5.6 and 6.0 percent. The developing South
Asian economies like Pakistan, India, Sri Lanka and Bangladesh
spend less than 3.5 percent of their GDP.
In health spending as percentage of GDP Germany, USA and
Japan spent around 11.1, 17.9 and 9.3 percent of GDP, whereas,
Brazil and South Africa spent 8.9 and 8.1 percent of GDP
respectively. In case of Pakistan, India, Sri Lanka and
Bangladesh spending stands at less than 4 percent. One could
observe that the recipe to sustain economic growth at higher
trajectories is by looking into the level of investment in human
capital by the developed economies in comparison with the
developing economies like South Asia.
Table 1: GDP per Capita and Investment in HRD
Country
Germany
USA
Japan
Brazil
South
Africa
Pakistan
India
Sri Lanka
Banglade
sh
Countries
by Income
Groups
GDP Per
Capita
current $
Education
Spending (%
of GDP) (A)
Health
Spending
(% of GDP)
(B)
Spending on
HRD (% of
GDP)
C=A+B
High
Income
Developed
Economies
41,863
5.1
11.1
16.1
51,749
5.6
17.9
32.2
46,720
3.8
9.3
13.1
Middle
Income
Developin
g
Economies
11,340
5.8
8.9
14.7
7,508
6.0
8.1
14.1
1,257
2.4
2.5
4.9
1,489
3.3
3.9
7.2
2,923
2.0
3.4
5.4
752
2.2
3.7
6.0
Low
Income
Developin
g
Economies
37
2007
2008
2009
2010
2011
2012
2013(P)
GDP growth
5.5
5.0
0.4
2.6
3.7
4.4
3.6
Agriculture
growth
3.4
1.8
3.5
0.2
2.0
3.5
3.3
Industrial
sector growth
7.7
8.5
-5.2
3.4
4.7
2.7
3.5
5.6
4.9
1.3
3.2
3.9
5.3
3.7
18.7
19.2
17.5
15.8
14.1
14.9
14.2
9.2
9.5
8.8
8.9
8.5
9.4
10.1
50.3
51.7
53.7
56.3
57.2
Service
sector growth
Total
investment
(% of GDP)
Federal tax
revenue(% of
GDP)
Labour force
(millions)
Bangladesh
60.5
Total net
enrolment
ratio in
primary
education
89.6
Bhutan
India
Maldives
Nepal
Pakistan
88.5
94.8
119.4
70.0
61.1
88.4
95.5
96.2
73.6
66.4
52.8
62.8
98.4
59.1
55.5
Sri Lanka
97.5
95.1
90.6
South Asia
78.8
86.4
67.9
Country/Indicators
Primary
education
completion
rate
39
55.9
Years of schooling
9.3
5.8
4.8
3.1
4.9
3.2
2.3
Country
Higher education
and training (rank)
Quality of
education
system3
Local availability of
specialized research
& training services
Bangladesh
126
94
127
Nepal
131
116
133
India
85
39
51
Pakistan
123
87
97
Sri Lanka
62
44
46
Imparting quality and new education with higher education means the
increase in the enrolment from secondary level to the college or
university level.
40
Nepal
Pakistan
Sri
Lanka
43.8
33.6
69.3
8.3
67.5
66.0
67.5
66.3
73.9
1.2
1.7
1.3
1.2
1.7
1.0
154.7
0.7
1236.7
27.5
179.2
20.3
20.6
20.2
21.0
22.3
26.2
18.3
5.8
6.6
7.9
6.8
7.0
7.0
3.7
4.1
3.9
5.4
2.5
3.4
2.2
2.3
2.5
2.5
3.3
2.3
Bangladesh
Bhutan
India
33.1
35.7
69.9
41
Countries
Afghanistan
(2008)
Bangladesh
(2013)
Bhutan
(2009)
India
(2006)
Nepal
(2013)
Pakistan
(2007)
Sri Lanka
(2011)
South Asia
Percent of
firms offering
formal
training
Proportion
of unskilled
workers
(out of all
production
workers)
(%)
Percent of
firms
identifying
labour
regulations as
a major
constraint
Percent of firms
identifying an
inadequately
educated
workforce as a
major constraint
14.6
29.9
4.5
18.0
21.9
21.3
3.4
15.7
29.9
...
16.4
12.6
15.9
36.3
9.2
14.5
31.9
15.2
2.7
9.1
4.5
19.1
6.4
8.1
13.1
14.6
12.7
16.0
19.3
20.0
7.7
13.2
43
Agriculture
Manufacturing
80
60
40
20
0
30
28
26
24
22
Mining
Construction
25
20
15
10
5
0
2000
1500
1000
500
0
44
55
300
50
200
45
100
40
Figure 4 shows that over the last one decade there is declining
trend in education and health expenditures which results in
declining labour productivity in all the sectors of the economy.
Declining trends in labour productivity push the country toward
low economic growth equilibrium.
Figure 4: Investment in HRD (as Percentage of GDP)
Public Spending on Education (% of GDP)
Linear (Public Spending on Education (% of GDP))
4
3
2
1
0
45
2011
2010
2009
2008
2007
2006
2004
2000
2002
35
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
Conclusion
Pakistan economic growth is dwindling over the time which may
be attributed to global financial crisis of 2008, floods of 2010,
poor law and order situation due to front line ally in war against
terrorism, declining trend in FDI, growing debt to GDP ratio and
low tax base. Study has highlighted the fundamental need of
HRD for fast growing population of the country. Over the period,
Pakistan has performed poor in human capital development in
comparison with regional economies like Bangladesh, India, Sri
Lanka and Nepal. Pakistan's poor performance in HRD indicators
are due to decline in investment in human capital over the time.
The skills development programs must cater to the demands of
employers in value added agriculture, industry and services
sectors. The vocational institutions also need to carefully look at
their syllabi in the light of developments overseas, where,
Pakistani Diaspora has potential for employment. Greater
coordination is required between Federal and Provincial
Governments for eliminating fragmentation of HRD programs
across the country. The Governance of public sector education
and skills development institutions may be improved through
allowing private management, as seen in the Punjab province.
Apart from the above, there are major governance reforms
required in HRD. After the 18th Constitutional Amendment (in
2011) education, health and vocational training have become
provincial subjects to the extent of funds management and actual
implementation on-ground. However, it is important to note that
this devolution does not excuse the Federal Government from its
policy and planning role in HRD. Since2011, the Federal
46
ISLAMABAD, PAKISTAN