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Another Crisis That We Don’t Really Talk About

It goes without saying that humans are central to economic growth and social progress. An individual's knowledge, skills, experience, and health enable one to contribute and become a productive member of society. According to the World Bank, "More human capital is associated with higher earnings for people, higher income for countries, and stronger cohesion in societies." Therefore investing in and building human capital is key for equitable economic growth.

To quantify the strength of human capital, the World Bank launched in 2018 the Human Capital Index ("HCI"), with education and health being its two key components. The HCI measures the amount of human capital that a child born today can attain by age 18. It ranges from 0-1, with 1 representing the total earnings potential the child can achieve with full health and complete education.

So what does the index say about the future and the next generation of the workforce?

Based on 2020 data, "nearly 60% of children born today will be, at best, only half as productive as they could be with complete education and full health" (The World Bank, The Human Capital Project FAQ). This reflects a severe human capital crisis, with substantial implications for economic growth and the world's collective ability to end extreme poverty by 2030." Just in case you wonder where the US stands, with an HCI of 0.7, a child born today will achieve 70% of her potential when she grows up, not that exciting!

Investing in children and giving them the best education possible may not yield immediate results but will lead to a brighter future and a better world to live in. This is an investment that is worth making!

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