Pakistan at 100: Human Capital Diagnostic for Pakistan

Pakistan is experiencing a youth bulge with the number of individuals entering the labor market over the upcoming years expanding at a faster rate than the total population. Given this abundant labor supply, investment in human capital and its utilization is critical to stimulating growth. Pakistan’s youth bulge can be turned into a demographic dividend if the economy is able to absorb the substantial number of young workers entering the labor force by creating sufficient quality jobs, and ensuring that individuals of working age—both men and women—participate in the labor force and are equipped with the right skills. Increasing female labor force participation could give growth a significant boost, which will require significant investment in human capital, with particular attention to closing existing gender gaps. Whether we talk about entrepreneurship or basic life skills, development of human capital is essential to utilize the tremendous potential of Pakistan, especially that of the youth.

Human capital enhancement requires investment in each stage of the life cycle

Human capital accumulation is a dynamic process that begins before birth through investments in maternal health and nutrition, continuing through early childhood development, and further through schooling and labor market experiences. The well-known expression “skills beget skills” captures the continuum of human capital investment. Investing in skills and labor—the most important assets of the poor—to enable the accumulation of more skills, whether through improved nutrition, stimulation at home, formal education or labor market experiences, and utilizing human capital in an efficient way is the most sustainable way to help individuals benefit from and contribute to the economy’s growth.

Improving human capital accumulation requires a life-cycle approach

The discussion below focuses on four critical pillars of human capital accumulation. Focus on these pillars can help policymakers design and implement key policy measures to boost the country’s human capital and labor productivity. The life-cycle approach highlights the importance of early intervention, where the returns to investment are larger at earlier stages of the life cycle. These pillars include informed decisions on parenthood; strong start through early childhood development; education and learning for all and labor productivity.

Note: This excerpt is taken from the ‘Pakistan at 100’ report recently launched by the World Bank Pakistan, which can be downloaded here.

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