Health and Human Capital

what is the role of health in human capital formation?

With the launch of the Human Capital and Human Capital Index Project just over six months ago in Bali, the thrust of conversations about investing in health has already changed.

The quest for universal health coverage policies — high-quality, affordable health care for all without affecting their financial capacity — is reinforced by the growing recognition that good health, nutrition and education are the basis for sustainable economic growth.

It is now better understood that a workforce with good levels of education, health and nutrition has more contributions to the economy than just building roads and building new bridges. For example, a randomized control trial in Jamaica showed that a simple intervention was inexpensive – such as having a health worker within the community to teach parents childcare skills.

Income could increase by 25% after two decades. Small increases in birth weight, a key indicator of fetal health, increase lifelong gains; while reducing smoking by about five years of smoking increases income by 7%. While investments in infrastructure may see faster returns, investing in health builds a productive workforce that transmits gains across generations.

The Human Capital Project has increased dialogue in more than 60 participating countries in order to accelerate the process of improvement to achieve human capital results. This process is being led by ministries of finance. Since the World Bank’s Annual Meetings in October 2018, these countries have been making significant efforts to develop strategies to address key challenges to achieve better outcomes. Human capital is now at the forefront of the country’s development plans with a whole-of-government clustering approach driving better outcomes.

Today, leaders in health, education, finance, social protection, transport, agriculture, and water and sanitation sit at the same table to make plans. The resulting programmes are better oriented to maximize impact. Tax policy reforms are also being introduced to increase fiscal space for human capital development. This kind of collaboration promises rapid progress in health and human capital. Here are some examples of this growing momentum:

The Government of Tajikistan held a high-level meeting of cabinet members to discuss human capital issues, which also focused on creating a multisectoral platform for early childhood development, a target area critical to achieving long-term impact on health and human capital.

Human capital development has recently become a hot topic of debate among Indonesia’s presidential candidates.

The Nigerian government has also formed a working group on human capital consisting of a variety of relevant sectors.

In Ethiopia, a multisectoral coordination committee of five ministers was formed to operationalize the government’s agenda on human capital.

Armenia, Azerbaijan, Botswana, Georgia, and Separately held high-level inter-ministerial discussions on the human capital project and their respective pathways forward. Pakistan held the Human Capital Summit and several other countries such as Nepal and Bhutan followed suit.

Global experience to date points to six opportunities to move forward in reducing gaps in health as part of the human capital agenda:

First, increase and stimulate funding for better results. Current spending on health must be increased, and what we already spend needs to be used more efficiently. Innovative partnerships, especially with the private sector, can help move in this direction.

Second, the importance of quality: Health issues and human capital development will not be solved by increasing the number of health centers and schools alone. We have learned this lesson the hard way: that the quality of health and educational services provided in the respective facilities is the key to success and cannot be ignored.

Third, we must broaden our investment horizons. The largest impact programs with the highest economic returns target pregnant women, young children, and adolescents, support the people involved throughout the life cycle and see returns decades later. Conversely, trauma – such as chronic malnutrition that occurs early in life – impedes physical and cognitive development and puts people who suffer from them on low lifelong production paths.

Fourth, countries must embrace the concept of innovation. While investing in already implemented, tried, and genuine programs such as childhood vaccinations is crucial, we must remain alert to new approaches to improve health outcomes. This could mean the emergence of new technologies, as well as new ways of organizing systems or inspiring people to change behavior.

Fifthly, stakeholders should be mobilized for change and demand should also be strengthened. As we work, we need to reflect on supply-demand approaches. Those concerned must be seen as development partners and given opportunities to participate and provide feedback to their Governments and service providers. This type of engagement is an audit of accountability, quality, and ultimately a source of development.

Finally, health and education initiatives must be harmonized. These two sectors have the potential to achieve steady results if they work together. Children learn best when they are healthy and education helps people stay healthy for life. Connecting sectors means that healthcare facilities and schools can be a continuous platform for children to survive and thrive.

It is gratifying to see that many countries are already making progress in these six areas and in investing in healthy, well-educated populations for generations to come.