Human Capital in the Pacific Islands and Papua New Guinea

In 2018, the World Bank launched the Human Capital Project, an ambitious global initiative to accelerate investments in people around the world – work that is especially important in the Pacific Islands and Papua New Guinea (PNG).

Human capital is the knowledge, skills, and health that people accumulate over their lives; and has been a key factor behind the sustained economic growth and poverty reduction rates of many countries in recent history.

Investment in human capital in vulnerable countries, including many throughout the Pacific region, is central to transformational results and growth into the future.

“The difference that the right kind of investments in people can make cannot be overstated: investing in people delivers extraordinary returns for countries, for communities and every citizen,” says the World Bank’s Program Leader for Human Development in PNG and the Pacific Islands, Aparnaa Somanathan. 

The Human Capital Project includes a Human Capital Index that measures the amount of human capital a child born today can expect to attain by the age of 18 given the quality of health and education in the country where he or she lives.

A critical challenge for the Pacific.

When this index is applied to the countries in the Pacific, the results are confronting.

The index, which could be calculated for nearly half of all Pacific Island countries, shows that on average, a child born today in the Pacific Islands will be only 47% as productive when he or she grows up; as would have been the case with optimal health and education services. In Papua New Guinea, the Index falls to 38%.

Critical areas of concern are nutrition and education. Deficiencies in nutrition and healthcare have led to stunting – an indicator for future losses in cognitive ability and earning capacity – in one out of four children on average in the Pacific Islands. This number grows to one in two in PNG.

When it comes to education, Pacific children are not staying in school long enough and the quality of education they receive is often below international standards. In PNG, for example, an average child will complete only eight years of school and learn only the equivalent of five years’ of learning, compared to global standards.

Big returns from the right investments in people

However, there are positive signs and global experience shows that with the right focus and targeted investments, progress is possible. Interest and focus on human capital in the Pacific is promising. In mid-2019, the World Bank brought together Ministers of Finance from across the Pacific for the first Pacific Human Capital Summit to help drive and prioritize investments in Pacific human capital.

PNG, which had concerning results in the Human Capital Index, was one of the first countries worldwide to commit to the Human Capital Project.

Now, throughout the Pacific Islands and PNG, the World Bank is working with countries to accelerate progress in human capital, while complementing government development plans. The World Bank is also supporting a training and skills program in Tonga; early age reading in Kiribati, Tonga and Tuvalu; and health and nutrition across the Pacific region, including a new  childhood development program in Marshall Islands focused on the earliest years of children’s lives.

Together with the governments of the region, the World Bank will continue to drive greater investment in the people of the Pacific, build the region’s human capital, and secure a more prosperous future for the region and its people.