Deteriorating health, education and training in many developing countries is dramatically depressing the future earnings of children born today, the World Bank has said.
In a report, the World Bank urges policymakers to focus on improving outcomes in three settings: homes, neighbourhoods and workplaces.
The report, Building Human Capital Where it Matters, finds that in 86 of 129 low- and middle-income countries health, education, or workplace learning declined between 2010 and 2025.
Analysing the links with earnings, the World Bank says children born today in low- and middle-income countries could earn 51% more through their lifetime if their country’s human capital matched that of the best-performing nations at similar income levels.
Mamta Murthi, its vice-president for people, said: “The prosperity of low- and middle-income countries depends on their ability to build and protect human capital. Right now, we see that many countries are struggling to improve nutrition, learning and skills of their current and future workforce, which raises concerns about labour productivity and the types of jobs their economies can sustain in the future.”
Evidence of this troubling deterioration includes the fact that in several sub-Saharan African countries, the average adult is shorter today than 25 years ago, pointing to a deterioration in underlying health.
Meanwhile, children across low- and middle-income countries are achieving lower learning outcomes than 15 years ago, the World Bank says, with the worst decline in sub-Saharan Africa.
The 140-page analysis draws on recent research to tease out a range of factors that affected human capital, from stunting in childhood due to malnutrition to the presence of criminal gangs in local neighbourhoods.
In the home, it points to research showing that the quality of care families are able to provide has long-lasting effects.
The World Bank references the millions of children in China being cared for by relatives while their parents move away to seek work and cites research showing that “these left-behind children live in homes with higher household income, but they do worse on tests of mathematics and language and exhibit higher levels of depression”.
The prevalence of crime in neighbourhoods also matters, it finds. The report cites research showing that “in San Salvador, people living in gang-controlled neighbourhoods had fewer assets, less income and lower educational attainment even relative to people living only 50 metres away”.
In the workplace – another setting where the Bank says human capital should be built up, through training and experience – the report points out that 40% of women in low- and middle-income countries are not in employment at all.
And for those people in the workplace, as many as 70% in low- and middle-income countries are in “small-scale agriculture, low-quality self-employment, or microfirms”, which generally offer “limited formal training and few on-the-job learning opportunities”.
The report recommends a wide range of policies to tackle these shortfalls, from parenting support to providing clean water to creating incentives to encourage apprenticeships.
And it suggests countries at similar income levels can vary significantly in human capital – highlighting Jamaica, Kenya, Kyrgyzstan and Vietnam as success stories.
With the US administration sceptical about the value of international aid, the president of the World Bank, Ajay Banga, has reframed the Washington-based institution’s role, to focus on jobs and economic growth.
