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HIGHER EDUCATION AND ECONOMIC GROWTH A CASE STUDY OF PAKISTAN

Tariq Mahmood

Abstract

This paper highlights the role of higher education for the economic growth in Pakistan. We explore the impact of increase in enrollment at tertiary level on the growth rate of income per worker. Estimating a growth model developed by Mankiv et. al. (1992), using the annual data of Pakistan, we find a robust relationship between higher education and economic growth in the long run. The model has also shown that investment in fixed capital has positive impact on economic uplift. Applying Johansen’s co-integration test, we show that the long run elasticity of income with respect to capital stock is different from its share in GDP, and increase in the enrollment per unit of effective worker helps in bolstering economic growth. But, like earlier literature we also find statistically insignificant relationship between higher education and GDP per worker. There are some fundamental reasons concerning to the ambiguous impact of investing in human capital on economic growth, particularly in the short run in case of Pakistan. First, the sharp increase in enrollment, recently, has been damaging the quality of education. Second, the unequal distribution of educational services has held back the efficiency of public expenditures, particularly before the reforms undertaken by higher education commission. Third, the low private return of education has limited the demand for higher education in Pakistan for almost fifty years.

Permanent link to this article: http://pje.aiou.edu.pk/higher-education-and-economic-growth-a-case-study-of-pakistan/