Alexei is a young man living in a suburb of Moscow, where he was born and raised. His estimated life expectancy is between 74-79 years. Mikhail, who is the same age as Alexei, lives in Chukotka region in the far east of Russia, where he was born. His expected life expectancy is much shorter, at between 59-63 years.
Stark differences exist across Russia not only in life expectancy but also in educational attainment. People living in Moscow or Saint Petersburg, for instance, are twice as likely to complete higher education as those living in Saransk or Volgograd. The earning potential of people in these regions differs dramatically.
Why is human capital so important?
Today, in OECD countries, human capital accounts for 70 percent of wealth, whereas for low-income countries, natural capital remains the biggest asset. In Russia, human capital accounts for 46 percent of the economy. Reaching the level of OECD countries could ensure long-term sustainability for Russia in the context of a global movement away from fossil fuels. Human capital has become a high priority for countries around the world, because its development lays a pathway to greater well-being and prosperity. Within countries, regardless of their income level, people with greater human capital are better off in life than those without.
How big are the gaps in Russia’s human capital development?
Let’s take a closer look. A child born in Russia this year will be 68 percent, on average, as productive as she could be, when she grows up, if she enjoyed complete education and full health. This compares well with the global average, whereby a child born today can expect to be just 56 percent as productive as she could be. From 2010 to 2020, Russia increased from 0.60 to 0.68 on the Human Capital Index, making it one of the fastest improving countries worldwide.
However, the 2020 Human Capital Index, which includes additional indicators for countries in Europe and Central Asia, shows that Russia is underperforming in some key areas compared to the regional average: in health and education sector spending by 1.8 points, and in human capital as a share of GDP by 0.9.
The probability of dying between ages 30 and 70 from cardiovascular disease, cancer, diabetes, or chronic respiratory disease is 25 percent in Russia, which is higher than the average for the Europe and Central Asia region (17%) and for higher-middle-income countries (20%). A major reason is the high prevalence of risk factors related to non-communicable diseases (NCDs).
One in five adults in Russia are obese, 30 percent are smokers, and 39 percent are heavy drinkers. About 32 percent of the population aged 18 and older suffer from hypertension.
The COVID-19 pandemic has compounded these vulnerabilities and challenges.
According to Rosstat Data, there were 71,700 more deaths in Russia during January-August 2020 compared with the same period in 2019. A broad set of measures is necessary to combat COVID-19, including testing, tracking and treatment of patients. But equally important is continuing to ensure routine health services and care for chronic conditions such as non-communicable diseases, HIV/AIDS, and tuberculosis. The elderly and people with NCDs are particularly vulnerable to the coronavirus. Mental health services should also be strengthened.
Given the lengthy, but necessary, school closures this year, Russia may see sizeable declines in education outcomes. We previously estimated a loss of around 16 PISA points for all students, equivalent to just under half a year in missed learning. Students from poor and vulnerable families are disproportionally affected. With learning losses so deep, significant compensation measures will be necessary.
So, what can be done to close the gaps?
Strengthening primary health care to manage common NCDs and emerging infectious diseases is key for building a resilient healthcare system. Making essential outpatient drugs for the coronavirus and NCDs affordable could save people’s lives and prevent complications which are expensive for the health system.
Expanding resources for the treatment of COVID-19 patients is the most pressing need, but starting to reorient the health care system toward prevention and primary health care could help avoid unmanageable escalation of health spending in the medium-term.
New digital services, including telemedicine and remote access to care, could make health and social care more easily available to more people, help change the way services are provided through allowing the elderly and patients with chronic diseases to receive care at home, and decrease unnecessary risks in institutional facilities.
The adoption of virtual diagnostic and treatment protocols would not only help protect doctors from the disease, but also prevent new outbreaks. Strengthening integration and coordination between health and social services could substantially improve support to the elderly and vulnerable. Relaxing telemedicine restrictions and establishing a regulated environment for virtual technologies could help build an integrated patient-centered model of healthcare delivery.
Social assistance also plays a role in human capital development. Russia has introduced measures to better support families with children, non-able-bodied persons, and the unemployed. Our research shows that these measures should be broadly effective to counteract the increase in poverty brought about by the pandemic.
Now is the right time for Russia to implement a fundamental national social assistance program which could expand during adverse economic conditions and contract when economic growth picks up. Many countries have similar programs that are specifically designed to reduce poverty and promote self-reliance by the poor. Russia has the capacity to substantially mitigate the impact of the crisis and, at the same time, build the foundation for eradicating extreme poverty in the future.
The gaps in Russia’s human capital development are not so wide they cannot be closed. To move forward requires action and collaboration across different sectors – health, education, and social protection. Policies must work in tandem for the benefit of families and individuals who need access to adequate healthcare, for children who need an education suited to future labor market demands, and for those who need help and protection in times of hardship such as these.
By investing in all its people, across the entire country, Russia can hope to achieve more equitable human capital development, a more resilient recovery from the pandemic, and greater long-term prosperity. And both Alexei and Mikhail, and their families can all hope for long, healthy, prosperous lives.
Related Speech: Human Capital as a Key Driver for Russia’s Sustainable Development (Renaud Seligmann, Gaidar Forum 2021)