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Inclusive Growth: Remedy for Pakistan’s Population Crisis

Unlike other countries in the region, Pakistan’s population growth has not slowed down and the situation is becoming unsustainable. Innovative approaches that generate economic opportunities are essential to engage the growing population in productive activities, greater female participation will not only benefit the economy but also help in lowering the fertility rate.

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According to the 1951  census, the Dominion of  Pakistan (both East and West Pakistan) had a population of 75 million population, in which West Pakistan had a population of 33.7 million and East Pakistan (now Bangladesh) had a population of 42 million. In the same year, China and India’s populations were 563 million and 361 million respectively.

Seventy years on the respective populations of Pakistan, Bangladesh, China and India are estimated to be 225 million, 166 million, 1,408 million and 1,393 million. However, other than Pakistan, these countries have seen their population growth rates get close to or below ‘replacement level fertility, which means the population growth is now stable

Pakistan’s fertility rate  (births per woman)  of  3.51  as disclosed in the United Nations report ‘2019 World Population Prospects’ is the highest in South Asia, where the average is 2.36 and is also significantly higher than the world average of 2.47. Pakistan’s population growth rate at two per cent is almost twice the global average of one per cent and puts it in the top quartile of 200 countries.

Read More: Why Pakistan needs to step up efforts to control its population

While a rapidly rising population has the potential of bearing demographic dividends as young people become productive adults if adequately educated and skilled, in the short and medium-term it leads to large numbers of dependent children.

Population control and economic development

As noted by the economist, Thomas Picketty, economic growth “includes a purely demographic component and a purely economic component, and only the latter allows for an improvement in the standard of living”. Empirical evidence indicates that for low-income developing countries there is a significant reduction in fertility rates preceding high per capita income growth rates. China and Vietnam were the first to lower their fertility rates among developing countries in the region, and also the first to experience economic take-off.

Having experienced a fertility rate above 4 in the 1960s and early 70s, China’s rate rapidly declined in the eighties to below 2 by 1992, and similarly, in Vietnam, it rapidly declined in the 1990s to reach around 2 by 2000. More recently India and Bangladesh have followed suit and their respective per capita GDP growth has correspondingly picked up.

Read More: The implications of Pakistan’s unbridled population growth

Between 2000 and 2019, China, Vietnam, India and Bangladesh – all countries that have seen fertility rates decline rapidly – saw their per capita income increase by 900 per cent, 600 per cent, 370 per cent and 345 per cent respectively. In comparison, Pakistan, with its continuing high fertility, saw income per capita grow by only 122 per cent in the same period.

Empirical evidence suggests that few developing countries, excluding those that are mineral resource-rich, have made the transition from low-income developing status to a medium-income country status without a  significant reduction in their fertility rate.

One of the explanations offered for this pattern is that the reduction of population growth rates frees investment resources from having to cater predominantly to the needs of a growing population (more schools, more hospitals, more housing) to being allocated towards productive investments.

Declining fertility also results in increasing personal savings and ability to invest, as well as greater female labor force participation. Moreover, the per capita public sector spending on health and education increases to improve overall development outcomes.

The virtuous cycle thereby creates results in further accelerating fast-growing economies while those stuck in the slow growth path continue to fall behind at an increasing pace.  Consequently,  the gap between fast-growing and slow-growing countries expands dramatically.

Read More: In need of the young population, China changes its family planning policy

Pakistan's demography

Inclusive policy measures

As it bears the burden of a rapidly rising population and accompanying low economic growth, Pakistan remains vulnerable to various human security challenges.  There is therefore an urgent need for policy measures to lower the fertility rate, but these must avoid encroaching on individual liberties and must certainly not be seen as coercive in any manner.

The population control campaign through a sterilization drive of mostly poor men, which was launched in India in 1976 during Indira Gandhi’s emergency rule was not only extremely unpopular but also unsustainable and of questionable efficacy.

Read More: UN reports Population explosion: Earth’s populace to reach 9.7b in 2050

Policy measures need to be inclusive and in keeping with cultural and religious sensitivities. A  critical component of these must be to expand existing programs to improve access to and quality of reproductive, maternal, child, and adolescent health services. Along with investment in family planning efforts, there has to be a concerted effort to increase women empowerment in all segments of society.

Greater female labor force participation will enable women to make their own decisions regarding how many children they would want to have, work more outside the home and invest more resources in their children’s education.

Bangladesh’s efforts at population control were greatly helped by enabling women to work in their garment industry by providing them with ‘women only’ transport buses. As more women became breadwinners and the family’s welfare was tied to their income, the fertility rate dropped dramatically.

Read More: Pakistan & Population Explosion: Know When its Time To Stop

In Pakistan’s conurbations the fast-growing Information Communication Technology (ICT), financial services, and hospitality sectors offer similar opportunities for greater women participation in the workforce if their concerns about physical mobility and personal safety can be suitably addressed. As well as promoting the economic inclusion of women, there also have to be direct interventions to increase female education through the provision of girl-friendly schools.

Utilizing Pakistan’s human resource potential

Along with pursuing well-directed population control efforts Pakistan needs to convert its present youth bulge into a demographic dividend by equipping them with the necessary education and skills such that they can meet the demands of the evolving labor market. If trained and skilled to participate in domestic and international skilled labour markets, they can enhance the nation’s competitiveness, domestic production and exports, as well as significantly boost inflows of foreign remittances.

However, the population dividend will not last forever, and if left unskilled and not economically engaged, they are likely to add to the depressing statistics of growing numbers of those engulfed in poverty. Even more ominously some of them could turn to illicit activities.

Numerous examples across the globe, including both developed and emerging markets economies, have demonstrated that Technical and Vocational Education and Training (TVET) offers the shortest and swiftest path to productive youth engagement. Urgent measures are needed to significantly enhance TVET training capacity in a relatively short period without requiring expanding the existing infrastructure.

Active involvement of industry in design, delivery and placement of graduates benefits not only in the provision of employable skills to the youth but also boosts industry to be more productive, competitive and efficient. Skilled workers as the most important instruments of increased productivity, industrial efficiency and quality assurance of their products.

Read More: The reality of family planning in Pakistan

Countries such as  India,  Sri  Lanka, and Nepal have made significant strides in terms of revamping their respective  TVET  systems with an enhanced focus on industry engagement and resultantly have moved from the old traditional supply-led system to a  demand-oriented  Competency-Based Training (CBT) mode. The demand-driven system ensures systematic and institutional engagement of industry in the overall TVET system through varied platforms.

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Pakistan’s present government in consultation with the industry is implementing CBT as part of the National Vocational Qualifications Framework  (NVQF)  and other industry-led initiatives.  The focus is to shift training from overwhelmingly supply-driven approach to being demand-driven with strong involvement of the formal private sector.

The partnership between industry and institution is beneficial in terms of employability, enhanced workplace productivity and enterprise competitiveness, and therefore translate into overall socio-economic development.

Read More: Pakistan’s Economy: long term direction?

The government’s Kamyab Jawan Skills for All aims to optimize the utilization of existing facilities, for example, engaging universities into TVET System for high-end technologies; implementation of Apprenticeship Laws across the country; implementing the System of Recognition of Prior Learning (RPL); introducing distance/online Learning Systems for Freelancing, etc.

While the above initiatives will help alleviate the capacity constraint in the short term, given the scale of the challenge, there is a need to invest in expanding the existing TVET infrastructure. Foreign  Remittances have remained one of the main planks of  Pakistan’s economy. 

Therefore,  there is a concerted effort to establish a robust TVET institutional mechanism that is not only capable of producing skilled workforce in accordance with international standards but is also adequately resilient and adept to constantly update itself in consonance with the demands of the international job market.

Read More: Facebook introduces financial education initiative for women-led businesses in Pakistan

The government under the leadership of Prime Minister Imran Khan that is cognizant of these challenges as well as the opportunity that the youthful population offers, and is determined to skill them in order to fulfil their enormous potential.

Pakistan Population Crisis

Embracing innovation

Finally, throughout history innovation arising out of new ideas has not only made lives better but also been a key determinant of the wealth of nations. Innovative technologies spur productivity gains that boost the wages of workers, which in turn means they can buy more goods and services. At the same time as businesses become more profitable, they can invest and hire more employees, all of which increases economic activity and the living standards of people.

Read More: State Bank to introduce collateral-free loan scheme to promote businesses

The Nobel Laureate economist Paul Romer, in his seminal work in 1990 on ‘endogenous growth theory’ demonstrated that productivity improvements were a byproduct of the endogenous processes within the economic system. He argued that it was not simply the result of external forces but rather internally driven by the development of ideas and innate capabilities.

Ideas, unlike tangible goods, are not depleted by use, and it is technologically feasible for any number of people to use them simultaneously once invented. Moreover, each person tends to benefit more when other people also consume it or make use of it. This is in sharp contrast to most tangible factors of production, say a tractor or a machine tool, whose usage by one makes it unavailable to others at the same time.

Read More: CPEC’s Role in Skill Development of Pakistan’s Youth

Given that ideas and innovations have increasing returns to scale, they have the capacity to boost economic growth well beyond that could be achieved by accumulating tangible factors of production such as labor, land and capital. Romer thus put the concept of ideas and innovation at the heart of economic growth.

Since each additional mind turned to the task of figuring out better ways to do things potentially adds to our stock of ideas, the more people we can include in the circle of those who can contribute their labor and genius to the economy, the better off we will be. This has profound implications for developing countries like Pakistan, which have scarce resources and competing needs but can bolster long term growth potential by enhancing their innovation capacity by drawing upon its large, fast-growing and youthful population.

Pakistan Population Crisis

In order to do so, Romer proposes to enable people to live together in dense urban agglomerations and allow market forces to guide most of the detailed decisions these people make about who they interact with each other. Together, the city and the market let large groups of people cooperate by discovering new ideas, sharing them, and learning from each other.

Read More: Pakistan’s cotton sector: innovation and investment

Pakistan’s policymakers need to embrace the concept of creating new ideas as a principal means of harnessing the potential of its fast-growing population to drive economic growth, improve their wellbeing, and by doing so also bring down the unsustainably high fertility rate.

Javed Hassan has worked in senior executive positions both in the profit and non-profit sector in Pakistan and internationally. He’s an investment banker by training. Twitter: @javedhassan

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