Demographic assets or liabilities
LAHORE: The human resource is an asset or a curse depending on how it is maintained by a nation. Highly skilled, educated and healthy human resources take countries to a new level; an illiterate, unqualified and unhealthy population is an unbearable handicap.
Economies thrived at this time on the basis of knowledge and innovation. These two virtues reduce cost, increase efficiency and eliminate waste.
Developed economies operate with an elderly population handicap and an acute shortage of young and energetic labor. To overcome this drawback, the developed countries of the world are looking for learned skill forces from all over the world.
Pakistan’s demographic divide is both a threat and an opportunity, it will all depend on how our planners maintain its 63 percent of human resources under the age of 25.
Most of the time, state efforts to enrich human resources are in vain as our educated and skilled human resources are poached by economically advanced economies.
The result is a growing stock of unproductive and illiterate human resources and an impoverished skilled workforce. Non-transparent policies have also contributed to the drain of skilled human capital, leaving the less productive and relatively less skilled workforce in the country.
The enrichment of human capital is vital for economic growth. We are left far behind many countries that were much weaker economically than us about six decades ago.
The economies of East Asia that were not endowed with natural resources like ours were much poorer than us. They far surpassed us because their enormous endowments in human capital, both in terms of education and health, were the main reason for this growth.
Our per capita income was double that of South Korea in 1960. Today, Korea’s per capita income is among the highest in the world, while Pakistan is ranked among the poorest countries.
The reason for this discrepancy is that literacy rates in the 1960s were 71 percent for the Republic of Korea and 68 percent for Thailand, while Malaysia reached a rate of over 50 percent. In developing countries of South Asia, the literacy rate was low; only 9 percent for Nepal and 16 percent for Pakistan.
After nearly five decades, the literacy rate has officially improved to around 60% in Pakistan, which is still lower than Korea’s literacy rate in 1961.
The literacy rate in South Korea has reached 98 percent and Malaysia has achieved a rate of around 90 percent.
Expenses for education, training, medical care, etc. are investments in human capital. Schooling, computer training, medical expenses, lectures on the virtues of punctuality and honesty also enrich the capital. These virtues increase income, improve health, or add to a person’s good habits for much of their life.
In the 1960s, life expectancy at birth was less than 45 years in countries of South Asia. In contrast, developing countries in East Asia have a life expectancy of well over 50 years, with the Republic of Korea reaching a figure of over 54 years. This was followed by a life expectancy of 53 years in Malaysia and 51 years in Thailand.
In Pakistan, life expectancy has increased to 66 years. In Malaysia and Korea, life expectancy now exceeds 78 years, with Thailand reaching 72 years.
The demand for human capital is derived from the production function and profit maximizing behavior, but the supply of human capital is generally dominated by nonprofit organizations, especially the state.
Pakistan is fortunate that the proportion of the working age population is increasing in the country with a decrease in the dependent age population. The reverse is true in most developed economies.
If the available human capital in the country were not endowed with knowledge-based education and health care, we would remain a low-income country even after 50 more years.
Evidence spanning many years is now available in over a hundred countries with different cultures and economic systems that show secondary and college education coupled with adequate state-provided health facilities dramatically increase income. of a person, even after deducting the direct and indirect costs of schooling, and even after adjusting for the fact that more educated people tend to have higher IQs and more educated, wealthier parents.
The incomes of the more educated are almost always well above average, although the earnings are generally larger in less developed countries.