New World Bank Human Capital Index measures how much countries could boost economic productivity by investing in people
BALI, Indonesia, October 11, 2018 – New World Bank research released today gives policymakers compelling evidence that delivering better outcomes in terms of children’s health and learning can significantly boost the incomes of people and of countries including Malaysia – with returns far into the future.
A Human Capital Index, launched this morning during the World Bank-IMF Annual Meetings, indicates that children born in Malaysia today will be only 62 percent as productive as they could be in adulthood, given the prevailing education and health outcomes in the country.
Globally, 56 percent of children born today across the world will lose more than half their potential lifetime earnings because governments are not currently making effective investments in their people to ensure a healthy, educated, and resilient population ready for the workplace of the future.
“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.”
Human capital—the knowledge, skills, and health that people accumulate over their lives—has been crucial behind the sustained economic growth and poverty reduction rates of many countries in the 20th century, especially East Asia.
Malaysia’s overall Human Capital Index (HCI) score of 0.62 is higher than the averages for upper-middle-income countries and countries in the East Asian and Pacific region but lower than the average for high-income countries.
The HCI highlights that Malaysia is a strong performer with respect to childhood survival: 99 out of 100 children born today survive to the age of five. A significant proportion of these children, however, suffer from malnutrition: one in five (21 percent) are stunted. The education component of the HCI shows that children in Malaysia can expect to complete 12.2 years of school by age 18. However, when years of schooling are adjusted for quality of learning, this is only equivalent to 9.1 years: a learning gap of 3.1 years.
“Malaysia performs well but can do even better to achieve higher outcomes given its current level of income and development ambition” said World Bank Group Representative to Malaysia and Country Manager Firas Raad. “The World Bank is committed to work with Malaysia to make needed and transformative shifts towards better nutrition and learning outcomes among children.”
The Human Capital Index measures the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and education that prevail in the country where he or she lives. The Index measures each country’s distance to the frontier of complete education and full health for a child born today. The measure includes:
- Survival – Will children born today survive to school age?
- Health – Will they leave school in good health, ready for further learning and/or work as adults?
- School – How much schooling will they complete and how much will they learn?
Gender-disaggregated data is available for 126 of the Index’s 157 countries. For this subset of countries, both boys’ and girls’ human capital is still far from the frontier of potential human capital accumulation. In most countries, the human capital gap for both boys and girls from the frontier is larger than the gap between boys and girls. In Malaysia, the HCI score for girls is higher than it is for boys.
The Index is part of the World Bank Group’s Human Capital Project, which recognizes human capital as driver of inclusive growth. In addition to the Index, the Human Capital Project includes a program to strengthen research and measurement on human capital, as well as support to countries to accelerate progress in human capital outcomes.