Pakistan trails far behind most of its competitors in social and human development indicators. Currently, the country ranks at 147th on the latest Human Development Index published by UNDP in March 2017, which is 12 ranks lower than in 2000. However, during this time, our economy grew at a respectable average per capita rate of around five per cent annually, in addition to intensive involvement by donors and international agencies in the education and health sectors. Pakistan benefitted from billions of dollars of foreign aid, adjustment loans from the IMF, the World Bank and the ADB. If it had invested all the official development assistance from 1960 to 2016 at a real rate of six per cent, it would have a stock of assets many times the current external debt of $74 billion.
Despite a healthy growth rate for decades, social indicators like infant mortality and primary and secondary enrollment are among the worst with the number of out-of-school children in Pakistan being the second highest in the world. Over a period of time, relative to countries of similar or lower its income level, Pakistan has systematically underperformed on most social development indicators such as education, health and fertility. Pakistan currently scores much lower on human development than Kenya, Bangladesh, Myanmar, Cambodia, Ghana, Zambia and many others with lower per capita income.
Lags in health indicators compared to other countries of similar income level show that Pakistan has 42 per cent lower health spending per capita, less public health spending by 1.6 per cent of GDP and 27 more infant deaths per thousand. We have 11 per cent higher babies born with low birth weight, 19 excess child deaths per thousand and 23 per cent less share of population with access to sanitation.
Similarly, with lags in education indicators relative to other countries at its level of income, Pakistan has 20 and 14 percentile points fewer of its elementary and secondary school age children, enrolled in primary and secondary schools, respectively. Moreover, in literacy Pakistan ranks 144 out of 160 countries with a literacy rate of mere 56.7 per cent, ie, over 40 per cent of Pakistani adults are illiterate, which is about 24 per cent more than what is normal for a country of its income level. Regardless of major efforts to increase services under donor-supported programmes in health and education, our public spending on education is 1.4 per cent lower than the benchmark for income level. There are nearly five additional students per teacher in Pakistani schools than what its income level would predict.
Government programmes and foreign assistance may have contributed to the overall economic growth. However, they are an egregious failure at promoting social and institutional development under the circumstances of oligarchy, elite domination, clientelism and patronage politics. The ruling oligarchy of this country, dominated by industrialists in urban centres and feudal lords in rural areas, coupled with patronage politics, explains much of Pakistan’s lag in social indicators for its level of income, and is consistent with the story that clientelism leads to low human capital accumulation.
The elite enforce their preferences on underinvestment in human capital by keeping social service delivery highly centralised, with all decisions on allocation of resources taken at the top, preventing any passing of decision-making to the majority at the local level. However, mere devolution of powers does not ensure a more efficient allocation of resources either, as the analysis of elected local governments’ expenditure patterns shows that provision of services is biased towards more targeted and visible goods attributable to the locally elected representatives, which is explained by the deeply embedded patronage political networks at the local level, similar to that at the centre.
These poor social indicators will haunt Pakistan for decades to come as it, in turn, will lower the productive potential of the economy, its ability to service its high debt and result in a loss of human welfare. With human capital not growing at the same rate as other factors, the diminishing returns on human capital will lead to a significant slowdown in economic growth not reaping the potential benefits from the megaprojects like CPEC.
Published in The Express Tribune, May 16th, 2017.