These Asian economies invested in their people – and it paid off

People pass the skyline of Singapore October 11, 2017. REUTERS/Edgar Su - RC19D146ABD0

On the move: Singapore performs best at giving its people prospects Image: REUTERS/Edgar Su

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Automation and malnutrition could create a global underclass and provoke unrest on a par with the Arab Spring.

This isn’t the opening sentence of a dystopian novel, it’s the bleak picture painted by the head of the World Bank, Jim Yong Kim in a speech at Stanford University about the Bank’s new Human Capital Index, which measures the knowledge, skills and health of populations.

The index is a wake-up call to countries that don’t invest in the health and education of their populations. Some countries, however, are getting it right.

Top scores for advanced Asian economies

Almost all Singaporean children can expect to achieve basic levels of proficiency at school.
Image: REUTERS/David Loh

The World Bank’s Human Capital Index aims to capture the amount of “human capital” a child born today could expect to accumulate by age 18.

It does this by breaking down human capital into a series of indicators on health and education.

For instance, the index looks at how likely it is that a child will reach the age of five, how many years of schooling they can expect to receive and the quality of that education, as well as whether they eat a full and complete diet and how likely they are to live to the age of 60.

 Human Capital Index figure 3
Image: World Bank

The index scores countries between 0 and 1. In a country with a score of 1, all adults can expect to survive until the age of 60, every child can expect to receive 14 years of high-quality education and no child would suffer stunting (when children don’t grow and develop properly and are too short for their age because of poor nutrition).

Asian economies take four of the first five places, with Singapore at the top, with a score of 0.88.

The vast majority (98%) of Singaporean children can expect to reach the international benchmark for basic levels of proficiency in secondary school.

 Human capital index

The Republic of Korea and Japan are next with scores of 0.84. A girl born in 2018 in the Republic of Korea can expect to live more than 85 years.

Hong Kong SAR is in fourth place with 0.82. Finland completes the top five.

‘Left behind’

Image: The World Bank

However, too many countries achieve a low score.

Children in rich countries can expect to receive the full 14 years of schooling used by the index as a benchmark. But in the poorest countries, children can expect to complete only half of that.

Meanwhile, 115 million children are stunted as a result of malnutrition, leaving them vulnerable to poor cognitive development and hampering their ability to learn.

The World Bank estimates that 250,000 children are in school but aren’t learning because of the poor quality of educational provision.

These issues become a stark reality when you compare Singapore’s index rating with that of South Africa’s.

In South Africa, which scores 0.41 on the index, only 26% of children can expect to complete secondary school to the same standard as their Singaporean counterparts. In Singapore, a child born today can expect to live until they are 89. In South Africa, it’s 68.

Adjusting to an automated future

This gap in human potential becomes even more urgent when we consider the changing nature of work. Technological advancements will require us to adapt to machines and algorithms taking over tasks previously done by humans.

According to the World Economic Forum’s Future of Jobs Report, the Fourth Industrial Revolution will bring significant job disruption.

The shift in the division of labour between humans, machines and algorithms could displace 75 million current jobs, but the report also finds that 133 million new roles may emerge at the same time.

The World Bank report argues that workers will need “advanced cognitive and sociobehavioral skills" such as “problem-solving, critical thinking and adaptation to new methods”. Otherwise, they will be unable to adjust to the coming changes.

Looking at the index, it’s clear that Singapore’s secondary school students are prepared for a tertiary education and the world of work, while almost three-quarters of South Africa’s young people are not. These are the “left behind” that the World Bank’s Dr Kim worries will feel angry at the opportunities denied to them.

In addition, the report points to the fact that, in an age where internet distribution is accelerating rapidly, we have a window into other people’s lives like never before, which allows us to make comparisons. And for those left behind, this will be a painful glimpse of what they have missed out on.

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Long-term return on investment

The World Bank does acknowledge that the case for sustained investment in health and education can be hard to make, given that the returns are not seen for many years.

“Building roads and bridges can generate quick economic – as well as political – benefits. But investing in the human capital of young children will not deliver economic returns until those children grow up and join the workforce,” says the report.

However, the report points out that seemingly insurmountable challenges to that investment can be overcome, and uses Singapore as an example.

“Just a generation ago, adults in Singapore had, on average, just two years of formal schooling. By paying sustained attention to human development, Singapore is now among the world’s highest performers on learning and in the Human Capital Index. Today, the country remains attentive to human capital issues in the face of rapid technological advancement.”

The costs of inaction, on the other hand, may simply be too great.

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