The Human Capital Index – an important new contribution

I’ve been re-reading the World Development Report (WDR) ahead of our conference on Universal Child Grants  (where we’re delighted to have the World Bank participating). The chapter on the Human Capital Index (HCI) was especially interesting, not least because of so much talk around the Index here at UNICEF and outside. More so because enabling children to fulfill their potential is at the heart of expanding cash transfers for children, and the links between child development and economic outcomes make a compelling argument for many decision makers. Reading it sparked a range of thoughts.

  1. The concept of Human “capital” doesn’t quite feel right when talking about child development, but maybe sometimes it’s necessary. These are children (and adults), not machines, of course: we want them to develop, grow and contribute rather than operate or produce. That said, it might well be useful as we articulate the importance of child development to audiences trained in some schools of economics: we need to make the case first for children themselves, but also societies and economies. We (I!) shouldn’t let a peeve get in the way of progress.
  2. There are always many ways to critique an index, but its construction is intuitive. Having worked on the Human Development Index and then multidimensional child poverty, I know every index has problems (sometimes many!).  Building from key aspects of child survival and measuring development against metrics of a childhood of full health and education, the HCI goes some way to achieving the elusive status of an index which makes intuitive sense.
  3. Combining countries across the income spectrum is welcome. Too often, analysis driven by data availability, divides countries by income status. The authors’ efforts to overcome this are valuable, especially where they highlight countries falling short of where one might imagine (UK, Belgium, the US).
  4. The conclusions are clear and compelling. The key conclusion is that supporting child development has large economic impact. For example, increasing from the 25th to 75th percentile in the Index (a challenging but not impossible task – e.g. increasing quality adjusted education in childhood by a bit over 3 years among other changes) will see GDP growth go up by 1.4 percentage points. Depending on exactly how this is interpreted (and if you dare trust my maths) this would see GDP doubled over 50 years if this increase in growth is sustained. It would be interesting and powerful to see the implications for countries’ aspirations to achieve middle and high-income status.
  5. The call for data is really important. The HCI authors are clear about data limitations. A particularly notable example: the report as a whole stresses the vital importance of children’s early years in laying a foundation for future development and productivity. Yet available data means this is captured essentially through stunting and survival – hugely important, but not capturing the full intention. If their call for improved data frequency, quality and consistency across countries are heeded, it would make a significant difference in understanding the situation of children.
  6. The focus on supporting country strategies is welcome. UNICEF has been working with government partners to increase investment in children for decades, through our work on Public Finance for Children. But maybe this focus by the Bank will encourage further and faster change, and help accelerate, deepen and further align our ongoing partnership.
  7. Building on existing efforts, this is an important new contribution. UNICEF has been arguing the case for child development  since our inception, and the Human Development Report created the Human Development Index in 1990. It’s important to recognize this history, and see this as an important contribution that builds on and supports the legacy of all those who work, and have worked, to see children’s potential fulfilled. It adds new analysis and attention to the relationship between child development and the broader impact on economies, which is a crucial consideration and vital for many policy makers.

    A young child in traditional clothing writes with the help of chalk on a blackboard.
    © UN0269868/Nigeria/2018/Knowles-CoursinA student writes the answers to an activity on the chalkboard in a classroom at Miya Central Primary School, Bauchi State, Nigeria.

As debate continues around the Index and its use rolls out, it will be interesting to hear if others inside and outside of UNICEF have different perspectives on the data used, the Index’s construction and conclusions. Do share your thoughts on Twitter.

 

David Stewart (@dmistewart1) is Chief of Child Poverty and Social Protection, UNICEF HQ.

 

Leave a reply

Your email address will not be published. Required fields are marked with “required.”