A new index, which measures how effectively societies devote resources to develop their people, shows Singapore topping the list.
The Human Capital Index (HCI), launched by the World Bank at its annual meetings in Bali yesterday, also saw three East Asian economies faring well, with South Korea, Japan and Hong Kong ranked second, third and fourth out of 157 economies, respectively.
The results, the global lender said, show that Singapore’s efforts to invest in the education and health of its people will lead to children born in the Republic today being able to fulfil 88 per cent of their potential to be productive when they turn 18, should they get a full education and enjoy good health.
“All of Singapore’s secondary school students are prepared for a post-secondary education and the world of work,” it said in a report.
The HCI is part of the Washington-based lender’s Human Capital Project to get countries to improve their investment in people, and was launched at the start of the International Monetary Fund-World Bank annual meetings.
“Investing in health and education has not gotten the attention it deserves. This index creates a direct line between improving outcomes in health and education, productivity and economic growth,” said World Bank Group president Jim Yong Kim. “I hope it drives countries to take urgent action and invest more – and more effectively – in their people.”
The HCI measures how countries are developing their human capital based on five indicators – the probability of survival to age five, a child’s expected years of schooling, test scores, the adult survival rate and the proportion of children under five who suffer from stunted growth.
The index found that about 56 per cent of all children born around the world today will lose more than half of their potential lifetime earnings if governments do not take appropriate steps to prepare for healthy and educated populations.
Human capital refers to the knowledge, skills and health, among other things, that people accumulate over their lives.
The World Bank said investments in it have been a key factor behind the sustained economic growth and poverty reduction rates of many countries in the 20th century, especially in East Asia.
“Policies to build human capital are some of the smartest investments that countries can make to boost long-term, inclusive economic growth,” Dr Kim said, pointing out that a quarter of children are likely to fail to meet their full potential because of malnutrition and diseases that cause stunting.
“If a country’s children grow up unable to meet the needs of the future workplace, that country will find itself incapable of employing its people, unable to increase its output and utterly unprepared to compete economically,” he added.
He cited the success of Vietnam, among the best performers in South-east Asia, as a country that managed to improve educational outcomes through increased spending – following the paths taken by other Asian peers such as China.
Vietnam ranked 48th on the index, with members of its population set to achieve 67 per cent of their future economic potential. Indonesia, however, ranked only 87th, and will see its population realise 53 per cent of their potential.
Dr Kim said Indonesia was one of the “early adopters” of the World Bank’s advice to move up the index, pointing out that 20 per cent of spending in the national budget was set aside for education. However, it still needed to work on some issues, such as reducing stunting, he said.
The evidence shows progress is possible, the bank said, citing education reforms in Poland and a reduction in stunting in Malawi.