Over the past decade, many countries have made important progress in improving human capital

THE HCI 2020 UPDATE
The 2020 update of the HCI incorporates the most recent available data to report HCI scores for 174 countries, adding 17 new countries to the index relative to the 2018 edition. The 2020 update uses new and expanded data for each of the HCI components, available as of March 2020. As in 2018, data were obtained from official sources and underwent a careful process of review and curation. Given the timing of data collection, this update can serve as a benchmark of the levels of human capital accumulation that existed immediately prior to the onset of the COVID-19 pandemic.
Globally, the HCI 2020 shows that, before the pandemic struck, a child could expect to attain an average of 56 percent of her potential productivity as a future worker. This global average masks considerable variation across regions and economies. For instance, a child born in a low-income country could expect to
be 37 percent as productive as if she had full education and full health. For a child born in a high-incomecountry, this figure is 70 percent.
INCOME ALONE DOES NOT EXPLAIN COUNTRY DIFFERENCES IN HUMAN CAPITAL
What explains these variations in human capital outcomes? While the correlation between HCI and gross domestic product (GDP) per capita is strong, human capital does not always move in lockstep with economic development. Countries like Burundi, Estonia, Kyrgyz Republic, Uzbekistan, and Vietnam have outcomes that are higher than predicted by their GDP per capita. Conversely, in a number of countries, human capital is lower than per capita income would suggest. Among these are several resource-rich countries, where human capital development has not yet matched the potential that one would anticipate, given these countries’ wealth.
Differences in the quantity and quality of schooling account for the largest part of HCI differences across country-income groups. Of the 33 percentage-point difference between the scores of the average lowand high-income country, almost 25 percentage points are accounted for by the differences in learning-adjusted years of school, a measure which combines expected years of school with learning as measured by harmonized test scores (i.e. test scores that are made comparable across countries).
While education drives HCI differences across country-income groups, education’s contribution to gaps within these groups varies by income level. For instance, education accounts for roughly 90 percent of the difference between high and low performers within high-income country groups, but only 60 percent
within the group of low-income economies. In contrast, differences in child survival rates account for less of the difference in HCI scores among high-income countries, largely because child mortality is low across these countries. The same is true for health differences, which explain a lower share of country differences in the HCI as one moves from low- to higher-income groups, since health outcomes tend to be uniformly better as countries get richer.2
Human capital outcomes also vary for girls and boys. A disaggregation of the HCI by gender—now available for 153 of the 174 included countries—shows that human capital is slightly higher among girls than
boys in most countries. Girls are not only catching up to but outperforming boys in expected years of schooling and learning outcomes in some regions. For example, in the Middle East and North Africa, girls can expect to complete more than half of an additional learning-adjusted year of school compared with boys. However, the reverse is true in Sub-Saharan Africa and in South Asia.Investing in human capital enhances social cohesion and equity while strengthening people’s trust in
institutions. Nowhere is this more important than in countries grappling with fragility and conflict. External shocks such as armed conflict and natural disasters have destructive impacts on both countries’ existing human capital stock and on the process of building new human capital. Evidence increasingly suggests that, for armed conflict as well as famine, these negative effects can persist for decades and even across generations. This weakens the core of sustainable and equitable economic development.
Unfortunately, yet unsurprisingly, the HCI 2020 indicates that, on average, countries impacted by fragility, conflict, and violence have lower HCI values, compared to the rest of the world. In particular, the seven countries with the lowest HCI 2020 scores are also on the World Bank’s current list of fragile and conflict-affected situations (FCS). This adds to the urgency of addressing human-capital gaps in FCS settings.
Only by preserving and rebuilding human capital can countries durably escape cycles of fragility and underdevelopment.
Stunting and adult survival are here considered together for easy comparison.