The development organization has put its considerable muscle behind a new international ranking of how well countries help their residents live up to their economic potential.
The bank’s Human Capital Index seeks to show, as a simple percentage, how close a country comes to providing education and healthy lives to all residents, thus maximizing their opportunity to succeed.
The United States comes in at 24th, behind many East Asian and European nations, and in a statistical tie with Serbia, a country with about a quarter as much GDP per capita. Broken down by gender, the United States comes in 25th for men and 32nd for women. Consistent gender data isn’t available for all countries, and thus the ranks shouldn’t be compared to the overall.
The bank estimates the United States enables its population to realize about 76 percent of its potential. Contrast that to 88 percent in the top-ranked country, Singapore, or just 29 percent in Chad, which came in last among the 157 countries surveyed.
“One feature of countries that are successful in the index … they also worry a lot about equal distribution of health and education,” said Simeon Djankov, director of the World Bank’s research department, who helped produce the index. “In Vietnam, urban kids from upper-income families do well on tests, but so do rural kids from not so well-to-do families.”
According to the World Bank, you reach your maximum human potential if you survive to age 5 without your growth being stunted, complete 14 years of “high quality” schooling by age 18 and survive to age 65.
Development economists see better use of human resources as low-hanging fruit. It simultaneously improves the well-being of humans and increases economic output without requiring leaps forward in spending or technology. Somewhere between 10 and 30 percent of the country-to-country difference in economic output per person is due to differences in human-capital use, the report’s authors estimate.
Their abstract measure has tangible impacts. If the United States were to deploy its human capital at Singapore-like levels over the next two decades, back-of-the-envelope math shows it would add roughly 0.8 percentage points to annual growth over that time. That one move would take the country from a slow and steady expansion to something near the 3 percent figures about which politicians rhapsodize.
Such a move isn’t as improbable as it seems. In 1950, the report notes, adults in Singapore averaged two years of formal schooling. Today, they’re near the top of the list with an expected 13.9 years of schooling by age 18.
Almost by definition, government investments in human capital take generations to pay off. Politicians are tempted to spend instead on short-term projects that goose growth numbers in the next data release. By measuring human-capital investments with a regularly updated index, the World Bank provides leaders with a more immediate measuring stick, and perhaps some incentive to make investments that likely won’t pay off until they’re out of office.
Countries with more resources, as measured by economic output per person, tend to rank higher on the index. But exceptions abound in the chart below.
“In general there is some pattern in the Middle East — even rich countries seem to underperform or don’t achieve the level of health and educational quality they may if resources were used effectively,” Djankov said. “And on the other side, you have East Asian countries — Vietnam, Malaysia, China — that, given their resources, overachieve.”
To measure the quality of education around the world, the bank’s researchers combined data from major international tests with regional examinations and related data sets. U.S. students rank 22nd in the world in academic achievement, according to their measure. Singapore again comes out ahead of the pack, and several Eastern European nations leapfrog the United States to enter the top 20.
Part of the World Bank’s goal in releasing this index is to improve measurement of human capital. At present, figures on education and health are difficult to come by, especially in the developing world. Only an estimated 38 percent of the world’s deaths are officially registered, as well as just 65 percent of its births.
The bank is working to improve measurement, but at present, it’s difficult to compare human health around the world. Researchers attacked the problem by examining death rates at different ages and measuring stunting, or the share of children under 5 years who are unusually short for their age.
“It speaks to the development of the brain and cognitive skills” and is an important measure of a child’s ability “to learn and be productive in their adult years,” said Annette Dixon, vice president of human development at the World Bank.
Stunting can be prevented through healthy nutrition and sanitation and by reducing air and water pollution and prolonged exposure to stress and violence, Dixon said.