Every few years, Pakistan debates the same questions: How do we raise more taxes? Attract more foreign investment? Secure another IMF program? These debates overlook a more fundamental one: are we investing the money we already spend in the assets that generate the greatest long-term returns?
This issue was at the heart of a recent policy roundtable organized by Globesight – Fiscal Choices, Human Consequences: Pakistan’s Development Budget in Focus – where economists, policymakers and development practitioners examined how Pakistan should allocate scarce development resources. One conclusion stood out: Pakistan’s greatest development opportunity is not another infrastructure project. It is the development of its people.
For decades, Pakistan’s development model has prioritized physical infrastructure – roads, ports, power plants and dams are essential ingredients of growth. Why this priority? Perhaps, partly because it is needed, but possibly more because the leadership understands infrastructure projectsbest (thekedar mindset perhaps). It should be understood that infrastructure alone does not create prosperity. Rather, It is productive, healthy and skilled people who transform infrastructure into economic output, and today Pakistan is paying an enormous price for underinvesting in them.
Pakistan’s greatest untapped resource is not buried beneath its soil. It is sitting in our classrooms, working in our fields, and waiting for the opportunity to compete with the world.
Childhood stunting alone is estimated to cost Pakistan approximately US$16 billion every year in lost productivity and reduced lifetime earnings. Diarrheal disease, despite being largely preventable, imposes another US$2 billion annually in treatment costs, lost productivity and missed school days. Together, these two preventable conditions cost the economy around US$18 billion every year – not simply health statistics, but lost economic output and diminished national potential.
The irony is difficult to ignore. Pakistan simultaneously loses an estimated 30-40 percent of its fruits and vegetables to poor post-harvest handling. We throw away nutritious food while millions of children remain malnourished, and lose exportable produce while farmers struggle with low incomes. A development strategy built around village-level cold storage, food processing, farmer training, nutrition program and value-added agriculture would reduce food waste, improve child nutrition, raise rural incomes and strengthen exports all at once – few infrastructure projects can claim such multiple returns. To put this in perspective, by some estimates, Pakistan’s post-harvest losses of raw produce are equivalent to US$7 – 10 billion, and equivalent to US$ 20 – 25 billion in exportable processed food.
The same principle applies to poverty alleviation. Pakistan now spends more than Rs700 billion ($2.5 billion) annuallythrough the Benazir Income Support Programme (BISP) and related initiatives, which play an indispensable role protecting vulnerable households and should remain a cornerstone of the social safety net. But by design, they are safety nets, not ladders to economic mobility. The larger challenge is to complement income support with investments that build productive capability: even a modest share of development resources redirected toward vocational education, internationally recognized technical certifications, food processing, digital skills and entrepreneurship could help families not merely survive poverty, but escape it permanently.
This brings us to Pakistan’s recurring balance-of-payments crisis. Every few years, the country returns to the same cycle of emergency financing, IMF negotiations and external borrowing. Yet its external accounts reveal a lesson we rarely acknowledge: Pakistan’s largest and most dependable source of foreign exchange is neither foreign direct investment nor multilateral lending. It is Pakistani workers.
Workers’ remittances now generate approximately US$40 billion annually, making them Pakistan’s single largest source of foreign exchange. By comparison, foreign direct investment has averaged only US$1-2 billion annually over recent decades, while IMF and multilateral financing offer temporary stability rather than sustainable growth. Perhaps we have been asking the wrong question: instead of how Pakistan can borrow more, we should ask how it can earn more – by treating skilled human capital as one of its most valuable export industries.
The developed world is entering an unprecedented demographic transition. Japan alone requires around 2.5 million elderly care workers and in the coming years, the requirement increases as its population ages. Europe faces growing shortages of nurses and caregivers, and hospitality, logistics, construction and digital businesses across advanced economies are struggling to recruit workers. Pakistan, meanwhile, possesses one of the world’s youngest populations – a demographic advantage that should become a national economic strategy.
Imagine a focused five-year program that prepares 200,000 Pakistanis for overseas employment in elderly care. If each worker remitted an average of US$20,000 annually, Pakistan could receive approximately US$4 billion in additional remittances every year – roughly twice the estimated annual cost of diarrheal disease alone. Expand that strategy to nursing, hospitality, skilled trades, food technology and information technology, and a ten-year national mission to prepare one million globally employable workers could realistically generate an additional US$30-40 billion in annual remittances, significantly strengthening Pakistan’s balance of payments.
This is not labor export in the traditional sense; it is the export of human capital. Countries such as the Philippines have shown that strategic investment in workforce development can turn overseas employment into a pillar of national economic resilience. Pakistan, with an even larger youth population, has an even greater opportunity.
Every budget reflects a country’s priorities. Pakistan can keep spending billions managing the consequences of underinvestment in its people – treating preventable diseases, supporting families trapped in poverty and repeatedly borrowing to finance external deficits. Or it can invest in preventing those problems by building a healthier, more skilled and globally competitive workforce.
The countries that prosper in the twenty-first century will not necessarily be those blessed with the richest natural resources, but those that invest most effectively in human capital. Pakistan is fortunate to possess one of the world’s youngest populations. If we make the right investments today – in nutrition, health, education, technical skills and internationally marketable capabilities – our young people can become our greatest export, our largest source of foreign exchange and our most powerful engine of growth.
Pakistan’s greatest untapped resource is not buried beneath its soil. It is sitting in our classrooms, working in our fields, and waiting for the opportunity to compete with the world.
The writer is a Senior Advisor at the Atlantic Council