Skip to Main Navigation
OPINION April 5, 2022

Why we must invest more in Guatemala’s human capital by Axel van Trotsenburg, Managing Director of Operations

I have both a personal and a professional attachment to Guatemala.  It is the first country I covered as country economist at the World Bank in the early 1990s.

Guatemala is a country with enormous potential and considerable development challenges.

Economic analyses in recent decades have highlighted the macro stability of the Guatemalan economy, the largest in Central America. In the last decade, real annual economic growth averaged 3.5 percent.

Guatemala had one of the smallest contractions in 2020, with a decline of 1.5 percent compared to an average fall of 6.7 percent in Latin America and the Caribbean.  It registered impressive growth of 8 percent in 2021. In addition, the Government and the private sector united in 2020 to sign the “Guatemala Won’t Stop” agreement, which seeks to increase competitiveness, promote trade and attract direct investment to boost diverse economic sectors.

However, inequality and poverty - with the third highest poverty rate in Latin America and the Caribbean - remain massive challenges.

In 1990/91 when I led a World Bank team on a country economic assessment for Guatemala, we highlighted that poverty was a pervasive problem, with the share of poor having reached more than 80 percent of the population 35 year ago. We recommended a set of measures that would help tackle poverty, reduce malnutrition, and bring about a more inclusive growth to the country.

Since that time, Guatemala has made some progress in reducing poverty – now around 47 percent of the population.  Primary school enrollments rates have also improved, and social protection spending has increased.  Guatemala has also boosted participation of women in the workforce by about 14 percentage points over the period of 1999 to 2019.

More can be done by continued – and deepened commitment to investing in human capital - in health, education, nutrition, and social protection.  This is essential for ensuring more opportunities for all and fostering greater social and economic inclusion, and for shared prosperity. It is the foundation for Guatemala to reach its economic potential. A recent World Bank study shows that low human capital is holding back Guatemala’s economic development: higher levels are required for faster more inclusive and resilient growth. 

Chronic malnutrition is one of the most urgent human capital challenges and affects about 1 in 2 children in Guatemala under five, and is even more prevalent among indigenous and poor children. This causes irreversible setbacks to their physical and mental development, jeopardizing the human capital of half a generation. According to the World Bank’s Human Capital Index, a child born today in Guatemala achieves just 46 percent of their potential due to poor health and not completing their education.  That not only limits their own future, but that of all Guatemalan society.

Tackling this challenge requires our collective action. The Government of Guatemala introduced in 2020 the Great National Campaign for Nutrition (GNCN), which aims to lower the malnutrition rate by 7 percentage points by 2024. This program brings together various government ministries and secretariats, civil society organizations, enterprises, municipalities and the international community, including the World Bank.

A key part of the GNCN is the Crecer Sano initiative, which was launched in September 2019 with technical and financial support from the World Bank. It focuses on increasing access to quality health and nutritional services, implementing strategies to change behavior, and improving water and sewerage systems across 139 municipalities in the country to prevent malnutrition in the first 1,000 days of children’s lives.

Today, as I begin a visit to Guatemala to learn firsthand about the progress of the Crecer Sano initiative and reiterate World Bank’s commitment, I want to emphasize the urgency and opportunity to scale up efforts in this area.  As all sectors of Guatemalan society come together to make lowering malnutrition and boosting investment in human capital the top priorities of the national agenda, we will be here too.