Fulfilling the Potential of Human Capital

I am thrilled to be back in Pakistan. It is a country very dear to my heart.

As Vice President for Human Development, one of my jobs is persuading governments to invest in human capital. I am happy to congratulate Prime Minister Imran Khan and his Government for ensuring that investing in the people of Pakistan is the Government’s top priority.

This commitment was reinforced by Minister Asad Umar at the World Bank Group Annual Meetings last fall in Bali, where he highlighted the Government’s focus on reducing stunting, increasing female labor force participation, ensuring better quality of education and health services for all, and providing support for the poorest and most vulnerable.

We have long known that investing in people is the right thing to do. We now have irrefutable evidence that it is also the smart thing to do. No country—and that includes Pakistan— prospers without first investing in its people. This is even more important than investing in infrastructure development. We know that in developed countries, human capital makes up 70% of their wealth, whereas it makes up only 40% of developing countries’ wealth.

Indeed, investing in nutrition, health care, education, jobs and skills—and ensuring that all Pakistanis are equipped to thrive in the 21^st century— is the best investment your government can make. I am very glad to see that the human capital agenda is the main theme of the discourse of “Pakistan@100: Shaping the Future”.

Human capital is central to the World Bank mission of ending extreme poverty and boosting shared prosperity. To this end, we launched the Human Capital Project, a new, global effort to accelerate more and better investments in people. One part of the project is a Human Capital Index, a summary measure of the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and education in the country where he or she lives.

The Index highlights, in quantifiable terms, the very real costs associated with poor outcomes in health and education. It shows that a child born today in Pakistan will only be 40% as productive by the age of 18 as he or she would have been had they been equipped with full health and education. And this is an average, which leaves us to imagine how little of their potential children from poorer households or other vulnerable groups can expect to achieve.

The Index has been a powerful call for action. We’re now working with more than 56 countries, including Pakistan, on ways to boost their human capital investments. Our teams work closely with governments as well as all other relevant stakeholders at the country level.

Our efforts to help Pakistan prioritize human capital investments are broadly in three aspects.

First, we are providing financial and technical assistance for the country’s initiatives-- population welfare, nutrition, education, skills, social protection and jobs. Many of the issues are interrelated, so should be the solutions. In supporting these areas, important priorities go to: investing in early years and promoting equity.

• Invest in early years, because there’s overwhelming evidence about the importance of the first 1,000 days as the foundation of human capital. Ensuring maternal and child’s health, nutrition and stimulation starting at conception leads to strong schooling, better learning, and higher adult wages.
• Pay greater attention to equity, because those who live in poor households, in lagging localities, especially women, show poor human capital indicators. This affects their job opportunities, income and ability to invest in their children, deepening the vicious cycle of intergenerational transmission of poverty. Countries that do well on human capital pay a lot of attention to important health and education outcomes for all their population.
  
• Given the emphasis on early investment and equity, I am very glad to see Pakistan building on the strong foundation of its basic income support system – the Benazir Income Support Program, which is playing a key role in helping Pakistan’s poorest families to keep their kids in school and improve their nutrition outcomes.

Second, we are working to strengthen the infrastructure and systems that will enable the country to invest in human capital and monitor progress.

• For instance, we are working to expand and prioritize measurement. You may have heard the saying – What gets measured gets done. In this sense, I applaud your decision to take part in the upcoming TIMMS (Trends in International Mathematics and Science Study) exercise, which will provide critical information on learning outcomes in mathematics and science.
  
• Another example of systems building effort is updating the information in Pakistan’s social registry. The National Socioeconomic Registry – NSER – is globally recognized as a powerful platform that enables a coordinated approach to target and address the needs of the poor. Efforts to frequently update and link to other vital systems like civil registration should continue.

And third, we are working to bring innovative solutions to help mobilize more resources for human capital investments.

• Fiscal constraints are real and important barriers to investing more in human capital. Thus, mobilizing resources and using the scare resources effectively and efficiently is critical. In Pakistan, we are exploring the possibility of using social impact bonds and increasing the role of the private sector in financing investments in human capital.
  
• In mobilizing resources, all stakeholders have an important role to play —whether they’re from the public or private sector, members of civil society or parents at a local school. We need “all hands on deck” to bring about real, lasting change.

The opportunity to leverage Pakistan’s human capital into accelerated economic growth is vast. So what will it take to move Pakistan forward?

1. Improved coordination across the government, so that interventions in different states reinforce each other.
   
2. Provinces and federal government need to work together.
   
3. Need supply side and demand side interventions, such as cash transfer programs – as well as universal health coverage and education systems that improve learning outcomes.
   
4. This requires a long-term human capital strategy that is sustained over time and supported by all stakeholders, even as governments and leaders change. It will require a focused approach in the decade ahead.

As Pakistan has stabilized over the past decade, there is now a real opportunity for policy-makers to focus on longer-term development of its people.

Moving forward will also require close attention to Pakistan’s demographics. We know that countries that achieved the so-called demographic dividend are the countries that were able to bring population growth down at the same time they improve human capital. Many East Asian countries are examples of this.

• For Pakistan, the critical issue is to ensure that girls stay in school longer and then enter the work force, because that creates a virtuous circle: girls that stay in school start their families later and have fewer kids. Also, better educated mothers have healthier, better nourished, and better educated children.
  
• But we also need to pay attention to boys, and make sure that they are staying in school—the imperative is to ensure that all kids stay in school and that they are learning well, without exception.

However, the work ahead won’t be easy. It would require changes at all levels -- the government’s priorities, the way schools operate, and how teachers teach, the attitude of communities towards women’s empowerment, and the behavior of families in caring for children and encouraging education for both boys and girls equally. The government’s decisions and actions today will have significant impacts in these areas and will determine the country’s future.

We know that rapid progress is possible. We’ve seen it in other countries—and are optimistic that Pakistan will make similar strides in the decade ahead. It will require more resources and a real commitment to scale up Pakistan’s many successes.

I look forward to discussing more concrete and innovative action plans during the summit, and also continuing to work together on this important and very urgent agenda. I am optimistic about the success and opportunity that await us. Thank you.