Economic policy debates in Pakistan tend to fixate on macroeconomic indicators—fiscal deficits, firm-level competitiveness, and GDP growth. Interest and exchange rates dominate discussions, while the deeper crisis — human development — remains overlooked. By prioritizing short-term numbers, policymakers neglect the real engines of sustainable growth: human capital, competitiveness, and productivity.
As economist Javed Hassan aptly notes, “The problem is not that GDP growth is irrelevant -it’s that it’s a lagging indicator, an effect, not a cause.”
Pakistan’s elite, who shape the national discourse, largely ignore the country’s dismal human development indicators. At best, they lament air pollution because it directly affects them. But the real crisis runs deeper: a systemic failure in human capital development, with little or no political urgency to address it.
The numbers paint a bleak picture. According to the World Bank’s Country Partnership Framework, Pakistan’s Human Capital Index (HCI) score is 41 out of 100—far below what is expected at its income level. This reflects not just poor human development but also deep inequalities.
One of the most alarming statistics is child stunting, affecting 38 percent of children under five — rising to a shocking 60% in the poorest rural districts. Poor nutrition, lack of dietary diversity, and unsafe water exacerbate the crisis. A quarter of Pakistan’s population lacks access to clean water and sanitation, with conditions worst in impoverished areas.
The first 1,000 days of a child’s life are crucial in preventing stunting, yet basic hygiene and clean water remain neglected. While finance ministers speak of macro hygiene, the real priority should be literal hygiene—to secure a healthier, more productive workforce.
Education statistics are equally damning. Pakistan’s learning poverty rate stands at 78%—meaning nearly four out of five children cannot read age-appropriate texts by age 10. More than 25.6 million children (one-third of those aged 5-16) are out of school, and among those enrolled, two-thirds fail to acquire basic literacy. This suggests that out of 77 million children, only 17 million receive even a minimal education. How will Pakistan compete in the global economy when nearly 60 million children are left behind?
The situation is even worse for girls. Only 26% of girls aged 14-15 are enrolled in secondary school. Pakistan ranks 142 out of 146 countries in the World Economic Forum’s 2023 Gender Gap Report, with female labor force participation at just 25%, among the lowest in lower-middle-income nations. No economy can thrive while half its population remains sidelined. Yet, Pakistan’s education system remains plagued by corruption, inefficiency, and an obsession with infrastructure over quality. Schools exist on paper; teachers are either ghost employees or under-qualified.
The focus should shift from brick-and-mortar projects to learning outcomes. A national strategy is urgently needed to lift 60 million children out of educational neglect and equip those receiving an average education with the right skills. In the digital age, Pakistan cannot afford an illiterate, unskilled workforce.
Beyond education, climate change is an existential threat. Pakistan ranks among the top 10 countries most affected by climate change and natural disasters. PM2.5 pollution levels- five times the WHO limit—are cutting life expectancy by 4.3 years. Yet, beyond the seasonal outrage over Lahore’s smog, meaningful action remains absent.
Pakistan’s economic future hinges on human development, not just GDP growth. As Nobel laureate Amartya Sen argues, “Human capital formation is the key to long-term economic growth.” No country—from the US to Japan, from Korea to China—has climbed the economic ladder without prioritizing education, health, and overall human development.
Pakistan does not need another charter of economy or a charter of democracy. What it truly needs is a Charter of Human Development — a national commitment to investing in its people. The sooner this realization dawns the better.
Copyright Business Recorder, 2025
Ali Khizar is the Director of Research at Business Recorder. His Twitter handle is @AliKhizar
Comments