Thursday, April 25, 2019
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World Bank is to be ashamed with "human capital" ranking

BALI, Indonesia – The World Bank's new "Human Capital" ranking, which honors countries for investing in health and education, was released here on Thursday morning and has already garnered a lot of criticism.

The World Bank evaluated 157 countries on whether their health and education systems would lead to productive workforce in an initiative aimed at calling countries that are not preparing their populations for the future.

"We really feel that there is no excuse not to invest in your people at this point," World Bank President Jim Yong Kim said Thursday at the annual meetings of the International Monetary Fund and the World Bank Group in Bali. "And besides, if you find an excuse not to invest in your people, it will be catastrophic for you as technology begins to change the nature of work."

Best and brightest

The World Bank's new Human Capital Index categorizes countries on their health and education outcomes, highlighting the large differences between regions.

Middle East and North Africa

Latin America and the Caribbean

Middle East

and North Africa

Latin America

and the Caribbean

Middle East and North Africa

Latin America and the Caribbean

Middle East

and North Africa

Latin America

and the Caribbean

At the top of the country rankings are four Asian economies: Singapore, South Korea, Japan and Hong Kong. The US ranks 24th.

The bottom of the World Bank index consists exclusively of poorer African countries: Chad, South Sudan, Niger, Mali, Liberia, Nigeria, Sierra Leone, Mauritania, Ivory Coast and Mozambique make up the bottom 10 countries.

Some critics say the World Bank is doing little more than humiliating poorer countries for their struggles.

"I think this initiative has a terrible name and is a terrible approach," said Eric LeCompte, director of Jubilee USA, an advocacy group dedicated to the causes of poverty. "What does the World Bank think with this name and disgraceful approach to human investment?"

The bank is picking up the controversy.

This approach, the World Bank argues, could provide more funding and better results than even major development efforts.

An example cited by Mr Kim in Bali is the fact that girls in many countries are less well educated than boys. "Let's say we raise $ 10 billion, everyone pats himself." Oh, we're so generous, "said Mr. Kim," but $ 10 billion will not affect the need to fund education for girls. We need to get heads of state and finance ministers to say, "Oh my God, we'll rank again."

The World Bank's strategy is to encourage finance ministers to spend more on education and health, although many of the benefits could take decades well beyond the election cycle.

Pakistan Finance Minister Asad Umar suggested that the pressure of an index, especially if a country is lagging behind, could trigger a change. Pakistan ranks 134th out of 157, just behind Afghanistan.

The Human Capital Index classifies countries on the basis of their performance in five questions on the health and education of children.

Singapore has low mortality rates, the typical student has 13.9 school years and the test results show that they learn a lot. World Bank research shows that these measures have a high correlation with per capita GDP and high productivity growth.

According to Nadia Daar, director of Oxfam International's Washington office, the focus is on "the right priorities" in the areas of health and education. "Governments too often overlook these areas because of short-term policies," she said.

The 5 questions

Questions on which the Human Capital Index of the World Bank is based

  • What is the probability of survival at the age of 5 years?

  • What percentage of children under the age of 5 have no stunting?

  • How many years do students stay at school?

  • How much do you actually learn (measured by international test results)?

  • What is the probability of surviving into adulthood?

Ms Daar said that one of the shortcomings of the approach is that it does not take into account inequality within a country's population.

The approach has also drawn skepticism for its design of man as capital. Human capital is a common term for economists: the idea that people's knowledge and ability to work is of great economic value. But this term alienates many who work in education and development.

"Framed as human capital, workers are limited to commodities," said David Edwards, secretary-general of Education International, a global federation of teacher unions. "The bank says poor children who die early can not contribute to national productivity as workers," Edwards said. "Is that a good argument, should we think about the many challenges?"

Mr. Kim said the report's preparation must be something that reaches ministers and heads of state.

"We try to make this a political issue that everyone will talk about," he said. "We know, and we've already heard that countries and leaders may find rankings unpleasant."

Mr. Kim said that the World Bank must take some responsibility for the lack of investment in people, especially in African countries, as it focuses heavily on infrastructure such as roads, railways and energy.

Some index-poor countries, such as India, Nigeria, Ethiopia and Pakistan, are among the 24 countries composed of developing countries that coordinate their responses to international issues. The group cautiously commented on the potential for "inappropriate use" of the ranking.

He encouraged the World Bank to continue its work on the index, including adjustments to the methodology or data that will be included in the final ranking.

"I'm not saying that I totally disapprove of the indices as they are," said Mangala Samaraweera, Sri Lanka's finance minister and chairman of the group of 24. But he said there is always room to improve, leaving an index " reflects what it intends to reflect in the most credible and accurate way. "

Write on Josh Zumbrun at Josh.Zumbrun@wsj.com and Saumya Vaishampayan at saumya.vaishampayan@wsj.com

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