PAKISTAN’S economic debate revolves around familiar topics like increasing GDP, attracting investment, boosting exports and creating jobs. However, a vital question often overlooked is: how much economic potential are we forfeiting due to inadequate investment in our people? This is arguably one of the most pressing issues Pakistan must address. Health, nutrition, population and human development are still largely considered social sector concerns – certainly important but competing with the “real” economic priorities of energy, infrastructure, industry and finance. This distinction is becoming increasingly untenable.
A child suffering from malnutrition, a young person lacking essential skills, a worker disabled by preventable disease or a productive adult dying prematurely isn’t just a human tragedy; it’s also a loss of human capital, productivity and national income. Pakistan’s Human Capital Index stands at a mere 0.41, compared to 0.48 for South Asia. This means a child born in Pakistan today is expected to achieve only about 41% of the productivity potential achievable with complete education and optimal health. This isn’t just a social statistic; it’s an economic loss.
The economic impact of human underinvestment is not theoretical. World Bank analysis reveals that undernutrition costs Pakistan approximately 3% of GDP growth annually due to productivity losses. Another study estimates that inadequate sanitation costs Pakistan 3.9% of GDP, with most of these losses stemming from health-related consequences. At a GDP of roughly US$407 billion, 1% equates to approximately US$4.1 billion. Consequently, the estimated productivity loss attributed solely to undernutrition amounts to roughly US$12 billion. The sanitation estimate alone represents approximately US$16 billion.
The population explosion further amplifies this argument. Pakistan’s population is often discussed purely as a demographic statistic, but it’s also a crucial economic variable. A recent Population Council analysis explored the economic repercussions of Pakistan’s demographic trajectory. Their cost-of-inaction analysis revealed that under a higher-growth scenario, Pakistan’s real GDP could have been 56% higher and per-capita GDP could have doubled.
This doesn’t mean population policy alone would have led to a 56% larger economy. However, it highlights the significant opportunity cost of inaction. Rapid population growth necessitates continuous expansion of spending on schools, hospitals, food, water, sanitation, housing and social protection just to maintain current service levels. A large population can be a substantial economic asset, but only if it’s transformed into healthy, educated, skilled and productive human capital. Otherwise, a potential demographic dividend can become a burden.
Pakistan need not look to wealthy Western countries for guidance; South Asia offers compelling examples. Bangladesh improved child survival, maternal health, immunization and fertility through community healthcare, family planning and maternal and child services, showing that how we invest matters as much as how much. Thailand’s 2002 universal health coverage, built on primary healthcare, public financing and financial protection, similarly shows how treating health as human capital strengthens institutions. Much of the GDP Pakistan fails to generate never appears in national accounts.
When a worker misses days of work due to illness, the lost output is largely unaccounted for. Similarly, childhood malnutrition, which diminishes cognitive capacity and lifetime earnings, doesn’t show up in the economy’s future income projections. Furthermore, when a family sells assets to cover medical bills, the resulting financial hardship isn’t reflected in the health budget. And when a productive adult dies prematurely from a preventable disease, GDP simply records the lost economic activity.
Then there are major shocks. For example, Covid-19 caused Pakistan’s economy to contract by about 0.5% in FY2020, while the 2022 floods resulted in estimated economic losses of approximately US$15.2 billion. These experiences illustrate why disease surveillance, vaccination, primary healthcare, nutrition, emergency preparedness and resilient health infrastructure aren’t just health sector concerns; they’re economic infrastructure.
Currently, Pakistan’s public health expenditure is around 0.8% of GDP. For a country with over 250 million people facing infectious diseases, malnutrition, maternal and child health challenges and rapidly rising non-communicable diseases, this level of investment warrants serious consideration. Therefore, Pakistan should establish a clear national objective to progressively increase public health investment towards 2% of GDP. I’ve been advocating for this since my time as Minister and I still hope for it. At today’s GDP, moving from 0.8% to 2% would represent an additional annual investment of approximately US$4.9 billion.
This shouldn’t be seen as another demand for a larger budget; it should be an investment compact. More children are vaccinated, leading to reduced stunting and fewer maternal and newborn deaths. Hepatitis diagnoses and cures are increasing, diabetes and hypertension are better controlled and cancer is being detected earlier. Primary healthcare is becoming stronger, catastrophic health expenditure is lower and domestic production of essential medicines APIs and vaccines is greater. Disease surveillance is improved and pandemic preparedness is strengthened.
We need a transformation in investment and the accompanying language. Education is an investment in human capital and health investment is essential for a healthy population and national development. Just as a road facilitates the movement of goods, electricity powers factories and digital connectivity drives business competition, healthy educated and skilled people are the foundation of a functioning economy. Pakistan has spent decades debating whether it can afford to invest more in health nutrition education and population management. Perhaps the question should be reframed: can Pakistan afford the economic losses stemming from under-investment in its people?
The solution isn’t simply more spending; it’s smarter investment, better governance and relentless accountability for results. Pakistan needs to shift from health expenditure to health investment, from treatment to prevention, from population growth to a population dividend and from fragmented programmes to integration. Our greatest economic asset isn’t just our land, minerals, factories, roads or financial capital; it’s our people.
—The writer is former Federal Health Minister.
