New World Bank Human Capital Index measures how much countries lose in economic productivity by underinvesting in their people
BELGRADE, October 11, 2018 — A child born today in Serbia will reach 76 percent of his or her full potential at the age of 18, according to the new Human Capital Index (HCI), developed by the World Bank Group and launched today at the World Bank-IMF Annual Meetings, in Bali.
This index for 2017 puts Serbia higher than the average for its region and income group.
Human capital—the knowledge, skills, and health that people accumulate over their lives—has been a key factor behind the sustained economic growth and poverty reduction rates of many countries in the 20th century, especially East Asia.
“For the poorest people, human capital is often the only capital they have,” World Bank Group President Jim Yong Kim said. “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 World Bank Group developed HCI for 157 countries to measure how human capital contributes to the productivity of the next generation of workers.
HCI is made up of five indicators: the probability of survival to age five, a child’s expected years of schooling, harmonized test scores as a measure of quality of learning, adult survival rate (fraction of 15-year olds that will survive to age 60), and the proportion of children who are not stunted.
The HCI reflects the productivity as a future worker of a child born today, compared with what it could be if he or she had full health and complete, high-quality education, on a scale from zero to one, with 1 as the best possible score. A country score of 0.5, for example, means that individuals – and the country as a whole – are forgoing half their future economic potential. Calculated over 50 years, this translates into deep economic losses: a 1.4 percent annual loss in GDP growth.
According to Human Capital Index, 99 out 100 children born in Serbia will survive to age 5, while a child who starts school at 4 is expected to complete 13,4 years of school by the 18th birthday. Harmonized test scores – which measure a quality of learning – for Serbia is 521 on a scale where 625 represents advanced attainment and 300 represents minimum attainment.
“While these ratings rightfully make Serbia proud, there is a lot of space for further improvement,” says Stephen Ndegwa, World Bank Country Manager for Serbia. “It is important not to fall into the trap of complacency since there is still a lot to be done. For example, the latest available PISA numbers show that 40 percent of students in Serbia are considered functionally innumerate in math and about 30 percent are functionally illiterate in reading.”
In addition, access to early childhood education is far from the EU 2020 target of 95 percent of children enrolled in preschools at age 4. There remain deep pockets of population, such as the Roma, who significantly underperform in the school system. For them, education systems are not acting as engines of social mobility, but rather replicating social inequalities.
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