World Bank chief says Singapore's top ranking in human capital is not because it was 'full of crazy rich Asians 50 years ago'
World Bank launches 'human capital' rankings based on health, education
The World Bank launched a new index that ranks member nations according to their success in developing human capital – measured by the productivity and earnings potential of citizens. The new system aims to encourage more effective investment in healthcare and education by governments.
Top-ranked Singapore, whose education system has generally served as a benchmark for countries around the world, has a lesson to teach under-performing nations, World Bank president Jim Yong Kim said at the World Bank-International Monetary Fund annual meeting in Indonesia.
"The most remarkable thing about Singapore is that this was not a country full of crazy rich Asians 50 years ago," Mr Kim said, in reference to the popular novel and movie. "This was a country that went from having low literacy rates and developing country kind of mortality numbers to where it is now because leaders took responsibility and said, 'We are going to measure it, we will get there and try all the different innovations'."
The World Bank argues that human capital, which it defines as the knowledge, skills and health that people accumulate over their lives, is critical to sustained economic growth and poverty reduction rates.
Similar to its Doing Business Index, which evaluates private sector conditions by country, the Human Capital Index (HCI) ranks 157 countries based on how well people are taken care of by aggregating the data of under-5 mortality rates, expected years of school, stunting rates due to malnutrition and adult survival rates. The 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.
“For the poorest people, human capital is often the only capital they have,” Mr Kim said. “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.”
African nations with high childhood stunting rates due to malnutrition and lower participation in formal education ranked lowest, while wealthier nations with access to education fared best. In Chad, the lowest country ranked on the list, the World Bank said productivity and earnings potential would be only about 29 per cent of what their potential would be under ideal conditions there.
In top-ranked Singapore, the earnings potential was 88 per cent. The United Arab Emirates ranked 59th between Ukraine and Vietnam. Productivity and earnings were measured at 66 per cent of potential for the UAE.
Mr Kim said the intention of the index is twofold: “naming and shaming” those countries that are ranked lower, while highlighting the economic upside of healthcare and education investment by holding up countries that perform well as examples of what better investment in people can provide.
That message may be resonating. Demand for World Bank loans for health and education are up 70 per cent in the year since the project was first announced, Mr Kim said. The index received unanimous support from the bank’s shareholders as represented by its executive directors.
The bank chief acknowledged that the rankings would be controversial, but said the need for more and better investment in people was “such that we couldn’t shy away from making leaders uncomfortable”.
“The bar is rising for everyone,” Mr Kim said. “Building human capital is critical for all countries, at all income levels, to compete in the economy of the future.”