New research measures how much countries could boost economic productivity by investing in people

A new World Bank research released today provides policymakers a compelling evidence that delivering better outcomes in children’s health and learning can significantly boost the incomes of people — and of countries — with returns far into the future.

Launched today at the World Bank-IMF Annual Meetings is the Human Capital Index. It measures the amount of human capital that a child born today can expect to attain by age 18, and each country’s distance to the frontier of complete education and full health for a child born today.

The measure also answers the questions: “Will children born today survive to school age?” (survival) “How much schooling will they complete and how much will they learn?” (school) and “Will they leave school in good health, ready  for further learning and/or work as adults?” (health)

Human capital pertains to the knowledge, skills, and health that people accumulate over their lives. It is a key factor behind the sustained economic growth and poverty reduction rates of many countries in the 20th century, especially in East Asia.

World Bank Group President Jim Yong Kim said, “For the poorest people, human capital is often the only capital they have. Human capital is a key driver of sustainable, inclusive economic growth, but investing in health and education has not gotten the attention it deserves. This index creates a direct line between improving outcomes in health and education, productivity, and economic growth. I hope that it drives countries to take urgent action and invest more – and more effectively – in their people.”

“The bar is rising for everyone,” Kim added. “Building human capital is critical for all countries, at all income levels, to compete in the economy of the future.”

The Human Capital Index showed that 56 percent of children born today across the world will lose more than half their potential lifetime earnings due to governments not currently making effective investments that ensure a healthy, educated, and resilient population ready for the workplace of the future.

According to the index, the Philippines performs better than the average for its income group in terms of the overall index, but it is below the average for the East Asia and Pacific region.

Children born in the Philippines will be only 55 percent as productive when they grow up as they could be if they enjoyed complete education and full health, the index found.

One of the major challenges in the country that the index highlighted is malnutrition. One in three Filipino children under age 5 is stunted, a key marker for malnutrition, which limits brain development. Due to this, children will face challenges in learning, are more likely to drop out of school early, and are less likely to hold good jobs as adults.

“The Government of Philippines recognizes these challenges and has initiated critical reforms to improve human capital in the country,” said Mara K. Warwick, World Bank Country Director for Brunei Darussalam, Malaysia, Philippines and Thailand.

“Policymakers have introduced universal kindergarten, created senior high school, provided greater funding for basic education, and expanded the Pantawid Pamilya Program, which has boosted school attendance among the poor. Going forward, key policy priorities in the Philippines are reducing stunting and improving the effectiveness of teachers to boost learning,” she added.

The Index is part of the World Bank Group’s Human Capital Project. It recognizes human capital as driver of inclusive growth. The project also includes a program to strengthen research and measurement on human capital, as well as support to countries to accelerate progress in human capital outcomes.

The Philippines, along with 27 other countries that include Indonesia, Poland, Saudi Arabia, and Ukraine, has expressed advance interest in participating in the project. Serving as the country’s focal point to work with the World Bank Group for this global initiative is Secretary Ernesto Pernia of the National Economic and Development Agency (NEDA). 

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