Research

Pakistan’s expenditure on higher education earmarked for the financial year 2018-19 was 2.4 percent of the GDP, the lowest in the region. The government has slashed the overall budget on education by around 20 percent and allocated Rs 20.64 billion for the higher education commission against its demand of Rs 55 billion which is a more than 50 percent cut.

The reduction in the funds means that many and the ongoing research projects, development schemes or scholarship programmes would be adversely affected and may be stalled. As reported in some sections of the press, the universities have been finding it hard to even pay the salaries for the month of December. If this situation is not addressed on an urgent basis, the whole system will be paralysed.

Ironically, all this is happening under a government which made the promotion of all tiers of education as the main plank of its electoral manifesto. The reasons why slashing the educational budget by half may be considered as questionable are myriad.

However, one reason why slashing the educational budget by half must be considered the “unkindest cut” of all is that education is the only hope of a poor person who can expect to break out of the vicious circle of poverty through education. Moving up the social ladder is relatively easier if one has higher education to one’s credit. The increasing frustration of many young individuals who supported the current regime because it promised to break the status quo is understandable.

The crucial role of education in the modern economy cannot be overemphasised. Education is justified for a variety of reasons. The famous human capital view suggests that if one invests in one’s education, one gets long term returns in the form of a better job and better income. Education is also justified on the basis of a human rights argument which suggests that education is a fundamental right of every human being.

There are arguments about efficiency and equity which highlight the crucial role of higher education in national development. Globalisation and international trade require countries to compete with one another. Successful countries hold a competitive advantage over other countries.

A typical developed economy has various industries with competitive advantages in the global market. A successful economy has a workforce capable of operating industries at a level where it holds a competitive advantage over the economies of other countries. The education and training of the country’s workforce is a major factor in determining how well the country’s economy will perform. Nations may incentivise training their workforce through tax breaks and by providing facilities to train workers.

Even as other factors have a definite role to play — such as geography and natural resources — the difference in the skill levels of the workforce is the single most important factor that distinguishes a developed from the developing economy. A better-trained workforce creates spillovers in the economy and positive externalities. All the companies in an economy may benefit from the externality of a large pool of skilled labor force created by the promotion of higher education from which to hire employees.

At an aggregate level, the public investment in education is justified by its returns like any other investment. There are several ways to estimate the returns on education, but two metrics are used frequently to measure how profitable the investment on education is: private rates of return on education and social rates of return. The private rate of returns to education is the increase in the earnings from an additional year of education for an individual who makes the investment decision on education, while the social rate of returns to education measures the increase in national income resulting from the same year of education. It is often the social rate of return that provides a basis for government programmes, such as scholarships and education loans that are aimed at increasing the levels of education.

There is compelling evidence to suggest that investment in higher education has significant returns. Regarding efficiency in the use of resources, spending on human capital is a remarkably profitable long-term investment. For example, in the United States, the long-term (1966–2015) average return on stocks and bonds was 2.4 percent versus a 10.5 percent overall private return on investment in education.

Interestingly, the returns on education in developing countries significantly exceed the returns on education in developed countries. The global average private rate of return on schooling is 10 percent per year of schooling. The returns on schooling are even higher for women, and the private returns on university education are higher than the returns on primary schooling.

According to one estimate, the private return on higher education in low-income countries is 26.8 percent, which is significantly higher than the private return on higher education in the high-income countries which is just 12.8 percent. Similarly, the social return of higher education in low-income countries is 13.2 percent which is higher than the social return of higher education in the high-income countries which is 9.7 percent.

In Pakistan, higher education has rarely received the attention it deserved until 2002 when the HEC was established. Under Prof Dr Atta-ur-Rahman it made significant achievements within a limited time.

Over the years, the HEC has instituted major upgrades for scientific laboratories, rehabilitated existing educational facilities, expanded the research support, and overseen the development of one of the best digital libraries in the region.

The programme for establishing new universities of science and technology, including science parks which have already attracted foreign investors, has proved the efficiency and the long-term benefits of higher education in Pakistan.

Despite the spectacular gains made by the HEC initially, the momentum could not be sustained after Dr Rahman left. An attempt to politicise the HEC under the PPP regime dealt a major blow to its working and curtailed the financial autonomy of the regulator.

The detractors of the existing structure of the higher education base their criticism on the ground that since the quality of higher education is “too poor,” current levels of investment in the higher education system represent a waste of scarce resources. At best, it is not an optimal investment.

Secondly, the “poor” teaching standards of the faculty (a significant share of which is foreign qualified) are used to justify only selective funding for the best and the brightest individuals for pursuing their degrees at the best universities in the world.

While there is merit in the critique of the higher education standards in Pakistan, one must realise that the higher education system evolves gradually even in the best of circumstances. It requires sustained efforts over centuries before the full potential of the higher educational institutions is realised.

It takes patience and determination before higher education begins to pay full dividends. A big problem for the education system in Pakistan is that it has to operate within the existing institutional arrangements. The role of academia-industry linkages has often been emphasised, and the faculty members have been encouraged, even forced, to look for such linkages.

The reality, however, is that we are far away from the situation where the industry is in the mood for meaningfully engaging with the academia. While we might find some examples of chambers of industry visiting the universities, it has been more of a polemic rather than a real linkage between the industry and academia.

The requirement of publishing research in journals is an irritant, too. Though there is no gainsaying the fact that being published in a high-quality journal is a measure of academic excellence, many of the issues specifically related to Pakistan may not be of interest to the international audience. The faculty is, therefore, forced at times to choose the issues which have academic interest for the international audience but little or no practical relevance to the solution of Pakistan’s problems.

A paradigm shift in the HEC being advocated by some critics, roughly translates into a dramatic decrease in the funding for the higher education, selective funding for a limited number of individuals and reversing the PhD programmes in Pakistan because of its “supposed” poor quality (which may not actually be the case because many Pakistani universities have begun to move to respectably high places in international university rankings) may be self-defeating. Though there are legitimate concerns about the quality of higher education in Pakistan, reversing the growth in the higher education would be disastrous.

The writer is an Assistant Professor at the Department of Economics, COMSATS University Islamabad, Lahore Campus and may be reached at rafi.amiruddin@gmil.com