In the past two decades, there has been an almost ten-fold increase in the number of private schools in Pakistan (from about 3,300 in 1983 to approximately 32,000 by the year 2000). Fifty percent of these schools were established after 1996, reflecting a relatively recent explosion in growth. Recent research shows a strong positive correlation between the quality of education and fees.

It is clear that education in Pakistan is fast becoming a market commodity, which will be bought and sold in the private sector, rather than being provided by the state. As Pakistan, and other developing countries, storm ahead on the course presently set, it is important to assess the long-term implications of this phenomenon for the development of these countries.

The importance of education cannot be exaggerated. It was recognized as a basic human right 50 years ago in the UN Declaration of Human Rights. However, that is not the reason why developed countries like Britain decided, almost 100 years ago, to provide free education to all their citizens. They took this decision after realizing, long after the US and many European countries did, the tremendous positive externalities of primary education, i.e., it benefits not only the person who receives education but also society as a whole.

These externalities have only grown since then. Strong links have been found between, for example, education and better health along with lower mortality and fertility rates. Due to its much higher literacy levels, Vietnam, despite being a poorer country, has child mortality rates that are one-third those of Pakistan. Similarly, education is seen to reduce poverty and raises productivity in all spheres of the economy.

Western governments spend public funds on education because they believe that a better-educated population will contribute to faster development. This is the lesson that Britain learned in early twentieth century, replacing its class-ridden, highly selective education system with universal, compulsory education, and it is based on the same logic, which motivates private employers to pay for employee training.

Equally, education is essential because, as Amartya Sen likes to emphasize, it is needed to realize human potential in a broader sense. It empowers people, making them confident enough to influence institutions, processes and policies that affect their lives. Education, thus, does not have to be justified in terms of its instrumental value.

However, if education is to contribute to national competitiveness and societal development, much depends upon how it is delivered. The approach that the Pakistan government seems to have taken is one advocated by the World Bank, the World Trade Organization and the International Finance Corporation (IFC). This entails viewing education as a market like any other.

Pakistan seems to have wholeheartedly embraced this philosophy and this is evident from the fact that private schools are flourishing all over the country. Naturally, as a developing country, Pakistan will also have to face the consequences of this policy. And the consequences of leaving education to the market are decidedly not that pretty.

First of all, it needs to be understood that markets develop through segmentation. In accordance with different levels of purchasing power, various levels of 'education', or products being sold in the name of education, are made available in the market for different segments of the population. This trend typically continues, increasing the discrepancy between the top and bottom tiers.

As most resources become concentrated to serve the upper classes, the poor are deprived of basic education, or anything that could be termed education. There is plenty of evidence that charges for education serve to exclude the poorest children from access to those basic services, or drive families into poverty through having to meet the extra costs.

Accordingly, as private schools become more pervasive, it is difficult to guarantee not only the quality of education delivered by private providers to the majority of Pakistani children but even its very existence. This is because under the market mechanism, faced with insufficient demand, schools are free to close down. In the absence of a publicly funded school in the area - something that might become the norm in Pakistan - many are thus denied access to any education, however inferior.

The consideration of education in terms of its instrumental value only is usually a self-fulfilling prophecy. Private provision of education to the poor is 'streamlined', so to speak, to cut costs. In other words, it is not 'education' at all, but more of a ritual enacted by teachers and pupils. The implications of imparting below par education, devoid of lofty ideals or stimulating ideas, to the majority in a developing country are staggering.

If you believe that education makes any positive difference to your quality of life at all, you must concede that the children of the poor will not only receive the worst jobs in the economy, but will be destined to live the worst lives as well.

Empirical studies have consistently shown that as costs to students and families increase, fewer children attend school. These user fees are especially disadvantageous for girls who historically have not been sent to school as often as boys. Those who are thus denied education have their human potential destroyed. They are extremely poor, usually unhealthy, and typically die decades earlier than the rest of us. They and their children are also open to the grossest forms of exploitation.

We have already seen the consequences of privatizing other basic services like water on the behest of the World Bank and the IMF. Typically, this has led to an increase in rates. In some towns in South Africa, water is delivered through pre-paid meters, much like cellular phones. When the money runs out, the water supply stops. This forces many people to collect water from untreated sources, exposing their children to water-borne diseases, which already kill more than two million children a year.

The argument for private provision of education is that it frees up resources that can be ploughed into making public services better. However, the IFC reports which point this out, do not provide any evidence to show that this migration actually results in the 'freeing up' of resources and capacity that could be put back into the public system. Instead, the money thus freed up is either used to pay back debt, or used to subsidize private concerns, when they claim to be providing a public service from private funds.

For those peddling it, the private provision of education is an extremely attractive proposition, with a global annual turnover of $3 trillion. It is no wonder that Western companies specializing in education want to pry open the markets of developing countries through the WTO, the World Bank and the IFC. The WTO wants to introduce education in the long list of services to which the organization's free trade policy applies. So far, some developing countries, notably India, have been resisting this move.

However, if education does one day become a service under the WTO rules, its subsidization by any government will be considered a barrier to trade, and thus demolished. Thus, countries like the US and Britain have been relentless supporters of putting education on the WTO list of services - no subsidies allowed by national governments - this would allow their universities to set up bases in countries such as Pakistan, without having to compete with institutions which may be providing better education for free.

The success of Western countries' own experiments with education of course flies in the face of all this. Recognizing the value of education to social and economic development, the US was one of the first countries to develop a publicly financed education system (with the development of private education in America, discrepancy between classes and social problems in the bottom half increased). Similarly, in Japan, the Fundamental Code of Education, issued in 1872 expressed the public commitment to make sure that there must be "no community with an illiterate family, nor a family with an illiterate person".

Thus - with the closing of educational gaps - began Japan's remarkable history of rapid economic development. Later on, particularly in the second half of the 20th century, South Korea, China, Taiwan, Hong Kong, Singapore, and other economies in East Asia followed similar routes and firmly focused on general expansion of education.

The 2003 OECD Report on Education has found Finland's school system to be the best in the world in terms of the quality of education. Pre-schooling for Finnish children begins at six years old - usually in a kindergarten - and a year later they begin their formal education. Teams from Britain and other developed countries have been going to Finland to study their educational system. All this attention has taken the Finns quite by surprise. To them, there is no magic formula. They are running things in a way that seems obvious to them.

The guiding principle of Finnish education is democracy and equal opportunity. There is no selection involved at any stage. All students are taught in the same class, and there is no streaming whatsoever. Moreover, all education along with the necessary schoolbooks, other learning materials, and meals are entirely free. Finally, if the journey to school of a pupil in basic education exceeds five kilometres or if it is difficult, taxing or dangerous for the pupil in other ways, then the pupil has the right to free transportation or suitable assistance.

In other words, the secret of Finnish success is generous government funding and no segmentation. Both these conditions are increasingly absent in Pakistan, where the entire system is based on streaming and segmentation. This is something that even neo-liberal economists such as Amartya Sen understand.

Sen recently suggested that the obstacle of unaffordability must be firmly removed across the world. To quote him: "I am, of course, aware that some champions of the market system want to leave school fees to the market forces. But this cannot but be a mistake given the social obligation to give the essential opportunity of schooling to all children."

Pakistan cannot afford to treat education like bananas. If it goes down that route, very soon the multinationals will take over the provision of education to its elite and upper middle class, alienating them even more from their own country. The middle classes will be left to local educational chains, and the vast majority languishing at the bottom will be denied a half-decent education, while delivering their families into poverty.

The privatization of education in Pakistan is likely to have dire consequences for the national competitiveness and social development of the country twenty years from now. By relinquishing the provision of education to market forces, the government of Pakistan may be digging graves for a vast majority of its citizens. The sooner the policy makers realize this the better.