The Need Of Reallocation Of Resources In Pakistan

 With 24 percent of the Pakistani population below the poverty line and almost half the population illiterate (World Bank), the proportion of the budget allocated by the government on Defence is deplorable. The government needs to realize that the consequences of spending as low as 1.8 percent of the budget on education can be catastrophic and hence increase its expenditure on education, reducing it on Defence.

Any developing economy that hopes to be a part of the developed world someday has to allocate a significant amount of resources towards the education sector. Studies confirm that the productivity benefits of education are large- just one additional year of education can increase productivity of a worker by 10 percent (Russell), hence an educated workforce means a much higher output of a country.  

Research has shown that Pakistan has lost a considerable amount of earnings due to under investment in education, implying that had the government spent more on education problems like poverty and unemployment would not be as serious as they are today. “Pakistan’s 1985 income would have been 25 percent higher if Pakistan had had Indonesia’s 1960 primary enrolment rate and about 16 percent higher if female enrolment rates had been the same level as for boys and extending these projections to 2005 it would be safe to conclude that Pakistan’s per capita income today would have been almost double than what it actually is and the record on poverty much better” (Bridsall, Ross, Sabot). “Pakistan missed economic opportunities that have been exploited by many developing countries by increasing educational levels for the bulk of its labour force and, thus, enhancing their household incomes and reducing poverty”(Khan). To avoid losing more potential output in the future the government needs to divert resources from defence towards education.

As proposed by Geofrey Harris, defence has a negative trade-off with education. Studies have found that an increase in defence expenditure involves an opportunity cost in terms of a reduction in some other sector mostly education. It is self evident that government expenditure on any activity means that those particular funds cannot be spent on possibly highly desirable activities.  “It is also important to note that half or more of such defence expenditure is usually allocated to personnel. The purchase of weaponry typically amounts to around 20 percent of defence expenditure” (Geofrey Harris). One might argue that the army employs a large number of people and reducing the budget for defence would cause these people to become unemployed, hence employment will fall. The answer to this is that the government along with reducing expenditure on defence is increasing it on education and education is not restricted to building schools and employing teachers. This sector also includes programmes such as vocational training centers which the redundant army officers can go to and hence improve their employability.

“Economists consider investment in education as an important factor contributing to “human capital” beside skills training and healthcare. Education through human capital formation can thus reduce poverty as proposed by the Poverty Reduction Strategy paper- more investment in human capital for sustained economic growth and poverty alleviation” (Khan).The positive relationship between years of schooling and labour market earnings is well established in the field of labour economics. Mincer in 1974 developed an economic model which showed a direct link between individual earnings and years of completed schooling. This clearly indicates that an educated workforce will earn more, implying a higher standard of living.

In opposition it might be argued that Pakistan shares its border with India, with which Pakistan has had a hostile relationship in the past and reducing expenditure on defence would threaten the national security of Pakistan. In response to this, it is not at all being suggested that the army should be withdrawn from the border. However the government needs to curtail excess expenditures which are included in defence but do not contribute towards national security in any way e.g. the perks army officers receive. Further a smaller but a more trained army would be better for Pakistan talking in terms of efficiency. The Palme report refers to the “increase in human deprivation in many developing countries which follows from the use of government revenues on the military rather on health and education.  The report also asserts that military spending can jeopardize economic growth and development and thus the foundation of lasting security.”(Geofrey Harris)

“Education is an effective solution for economic backwardness which is highly linked to low labour efficiency and training, deficient supplies of entrepreneurship and slow growth in knowledge. The countries that have surged ahead are characterized by high level of human capital accumulation where the educated labour force has raised the level of output and the rate of growth over a sustained period of time”(Ishrat Hussain)

The government needs to take drastic steps towards improving the education system of Pakistan if it wants Pakistan to move on the road towards development. Spending more on education will yield more that what spending on defence has yielded over the past 64 years.

Written By: Ayeshah Tetlay ( LUMS )