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August 3, 2018

Investing in People to Build Human Capital

Scientific and technological advances are transforming lives: they are even helping poorer countries close the gap with rich countries in life expectancy. But, In fact, more than 260 million children and youth in poorer countries are receiving no education at all.

There is a moral case to be made, of course, for investing in the health and education of all people.  But there is an economic one as well: to be ready to compete and thrive in a rapidly changing environment.


Governments have long invested in economic growth by focusing on physical capital — roads, bridges, airports, and other infrastructure. But they have often under-invested in their people, in part because the benefits have been much slower and harder to measure. Hence, as World Bank Group President Jim Yong Kim noted recently in Foreign Affairs, the world today faces a "human capital gap."

This is a key insight from the World Bank’s forthcoming World Development Report 2019: The Changing Nature of Work. The frontier for skills is moving faster than ever before.

But without an urgent and concerted global effort to build human capital, vast numbers of people and entire countries are in danger of being excluded from future prosperity.

The Human Capital Project 

This urgent challenge is why President Kim has put the full backing of the institution behind a new Human Capital Project. The World Bank Group is committing to help countries prioritize human capital in a sustained way, given the deepening recognition that jobs and skilled workers are key to national progress in countries at all income levels.

There are three main objectives: first, to build demand for more and better investments in people; second, to help countries strengthen their human capital strategies and investments for rapid improvements in outcomes; and third, to improve how we measure human capital.

The new Human Capital Index, to be released at the World Bank’s Annual Meetings in October, will support all three objectives and offer a crucial resource for both governments and citizens. It will help measure productivity-related human capital outcomes such as child survival, early hardwiring of children for success, student learning, and adult health.

Two girls at the Maternal and Child Welfare Center (MCWC) Palash Community Clinic, in Bangladesh. © Rama George-Alleyne/World Bank
Two girls at the Maternal and Child Welfare Center (MCWC) Palash Community Clinic, in Bangladesh. © Rama George-Alleyne/World Bank

From Transparency to Transformation

The index will measure the health of children, youth, and adults, as well as the quantity and quality of education that a child born today can expect to achieve by the age of 18.  This will help strengthen transparency, which strong evidence suggests can move people and policymakers to demand and create better services. The data is intended to jumpstart a conversation in each country about what matters for tomorrow, led at the highest levels of government.

“The new measurements will encourage countries to invest in human capital with a fierce sense of urgency. That will help prepare everyone to compete and thrive in the economy of the future – whatever that may turn out to be,” President Kim said. “And it will help make the global system work for everyone.”

The Human Capital Project will help countries in several areas: leveraging resources and increasing spending efficiency, aligning policies with results-focused investments, and addressing measurement and analytical gaps.

Governments are already demonstrating an interest in transforming their human capital outcomes.  Some of the first countries that are working with the World Bank Group on human capital strategies will share highlights at the Annual Meetings in October.

No country can afford to under-invest in its human capital. While the context varies, a focus on human capital is essential for countries at all income levels, since the frontier for skills is continuously moving and the demand for better education and health is increasing everywhere.

The Human Capital Project should deliver progress toward a world in which all children arrive in school well-nourished and ready to learn; can expect to attain real learning in the classroom; and are able to enter the job market as healthy, skilled, and productive adults.