Kim to use Human Capital Index to put pressure on governments

World Bank Group president Jim Yong Kim plans to take the new Human Capital Index he launched on Thursday to Davos in the new year, where he will urge CEOs of companies in lagging countries to invest in health and education.

  • By GlobalCapital
  • 11 Oct 2018
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The index measures the amount of capital a child born today can expect to attain by age 18, by measuring how far each country is from having a complete education and health system. The thinking is that a country with a high index score should attract more foreign direct investment than a rival with a lower score, because the workforce will be healthier and more skilled and therefore more productive.

Kim said he would use the survey to raise investors’ awareness about the issue. “I am going to Davos, where I am going to make a big presentation on this,” he said. “I am saying to the corporate leaders: we would like you to ask countries, specifically countries that do not do well: why are you so low on the index? It matters a lot to us that you commit to invest in people.”

The World Bank expects that its new index will lead investors to put pressure on policymakers to improve their countries’ performance in health and education.

While Asia takes the top four places in terms of human capital (Singapore ranking first), 12 African countries are at the bottom of the ranking of 157 countries.

“If you are a corporate leader and you are thinking of investing in a country building production capacity, you are going to think about what is the workforce going to look like in five or 10 or 15 years,” said Kim. “If you see that a country is surprisingly very low on the human capital index, you are going to think twice about whether you invest in that country.

“So we hope that market forces and corporate leaders will pay attention to this, and simply emphasise to national leaders that they should focus on this. We are trying to make this a political issue that everybody will talk about.”

Investing in human capital may be preferable to investing in infrastructure, according to the World Bank chief. “This is about drawing their attention to a crisis that we think is real.”

Nadia Daar, head of Oxfam International's Washington office, said: “While the index doesn’t capture inequalities in outcomes, one thing should be clear: more and better spending is needed for governments to provide universal access to quality public education and health services.”

  • By GlobalCapital
  • 11 Oct 2018

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