U.S. ranks 24th when it comes to help­ing res­i­dents reach their po­ten­tial

It is 25th for men, 32nd for women in World Bank’s global lists

The Washington Post - - ECONOMY & BUSINESS - BY ANDREW VAN DAM AND JEANNE WHALEN

The de­sire to climb ar­bi­trary rank­ing lad­ders seems to be an in­nate hu­man in­stinct. The World Bank hopes to har­ness it for good.

The de­vel­op­ment or­ga­ni­za­tion has put its con­sid­er­able mus­cle be­hind a new in­ter­na­tional rank­ing of how well coun­tries help their res­i­dents live up to their eco­nomic po­ten­tial.

The bank’s Hu­man Cap­i­tal In­dex seeks to show, as a sim­ple per­cent­age, how close a coun­try comes to pro­vid­ing ed­u­ca­tion and healthy lives to all res­i­dents, thus max­i­miz­ing their op­por­tu­nity to suc­ceed.

The United States comes in at 24th, be­hind many East Asian and Euro­pean na­tions, and in a sta­tis­ti­cal tie with Ser­bia, a coun­try with about a quar­ter as much GDP per capita. Bro­ken down by gen­der, the United States comes in 25th for men and 32nd for women. Con­sis­tent gen­der data is not avail­able for all coun­tries, and thus the ranks should not be com­pared to the over­all.

The bank es­ti­mates that the United States en­ables its pop­u­la­tion to re­al­ize about 76 per­cent of its po­ten­tial. Con­trast that with 88 per­cent in the top-ranked coun­try, Sin­ga­pore, or just 29 per­cent in Chad, which came in last among the 157 coun­tries sur­veyed.

“One fea­ture of coun­tries that are suc­cess­ful in the in­dex ... they also worry a lot about equal dis­tri­bu­tion of health and ed­u­ca­tion,” said Simeon Djankov, di­rec­tor of the World Bank’s re­search de­part­ment, who helped pro­duce the in­dex. “In Viet­nam, ur­ban kids from up­per-in­come fam­i­lies do well on tests, but so do ru­ral kids from not so well-to-do fam­i­lies.”

Ac­cord­ing to the World Bank, you reach your max­i­mum hu­man po­ten­tial if you sur­vive to age 5 with­out your growth be­ing stunted, com­plete 14 years of “high qual­ity” school­ing by age 18 and sur­vive to age 65.

De­vel­op­ment econ­o­mists see bet­ter use of hu­man re­sources as low-hang­ing fruit. It si­mul­ta­ne­ously im­proves the well-be­ing of hu­mans and in­creases eco­nomic out­put with­out re­quir­ing leaps for­ward in spend­ing or tech­nol­ogy. Some­where be­tween 10 and 30 per­cent of the coun­tryto-coun­try dif­fer­ence in eco­nomic out­put per per­son is due to dif­fer­ences in hu­man-cap­i­tal use, the re­port’s au­thors es­ti­mate.

Their ab­stract mea­sure has tan­gi­ble im­pacts. If the United States were to de­ploy its hu­man cap­i­tal at Sin­ga­pore-like lev­els over the next two decades, back-of-the-en­ve­lope math shows it would add roughly 0.8 per­cent­age points to an­nual growth over that time. That one move would take the coun­try from a slow and steady ex­pan­sion to some­thing near the 3 per­cent fig­ures about which politi­cians rhap­sodize.

Such a move is not as im­prob­a­ble as it seems. In 1950, the re­port notes, adults in Sin­ga­pore av­er­aged two years of for­mal school­ing. To­day, they are near the top of the list with an ex­pected 13.9 years of school­ing by age 18.

Al­most by def­i­ni­tion, gov­ern­ment in­vest­ments in hu­man cap­i­tal take gen­er­a­tions to pay off. Politi­cians are tempted to spend in­stead on short-term projects that goose growth num­bers in the next data re­lease. By mea­sur­ing hu­man-cap­i­tal in­vest­ments with a reg­u­larly up­dated in­dex, the World Bank pro­vides lead­ers with some in­cen­tive to make in­vest­ments that prob­a­bly will not pay off un­til they are out of of­fice.

Coun­tries with more re­sources, as mea­sured by eco­nomic out­put per per­son, tend to rank higher on the in­dex. But ex­cep­tions abound.

“In gen­eral, there is some pat­tern in the Mid­dle East — even rich coun­tries seem to un­der­per­form or don’t achieve the level of health and ed­u­ca­tional qual­ity they may if re­sources were used ef­fec­tively,” Djankov said. “And on the other side, you have East Asian coun­tries — Viet­nam, Malaysia, China — that, given their re­sources, over­achieve.”

To mea­sure the qual­ity of ed­u­ca­tion around the world, the bank’s re­searchers com­bined data from ma­jor in­ter­na­tional tests with re­gional ex­am­i­na­tions and re­lated data sets. U.S. stu­dents rank 22nd in aca­demic achieve­ment, ac­cord­ing to their mea­sure. Sin­ga­pore again comes out ahead of the pack, and sev­eral Eastern Euro­pean na­tions leapfrog the United States to en­ter the top 20.

Part of the World Bank’s goal in re­leas­ing this in­dex is to im­prove mea­sure­ment of hu­man cap­i­tal. At present, fig­ures on ed­u­ca­tion and health are dif­fi­cult to come by, es­pe­cially in the de­vel­op­ing world. Only an es­ti­mated 38 per­cent of the world’s deaths are of­fi­cially reg­is­tered, as well as just 65 per­cent of its births.

The bank is work­ing to im­prove mea­sure­ment, but at present, it is dif­fi­cult to com­pare hu­man health around the world. Re­searchers at­tacked the prob­lem by ex­am­in­ing death rates at dif­fer­ent ages and mea­sur­ing stunt­ing, or the share of chil­dren un­der 5 years who are un­usu­ally short for their age.

“It speaks to the de­vel­op­ment of the brain and cog­ni­tive skills” and is an im­por­tant mea­sure of a child’s abil­ity “to learn and be pro­duc­tive in their adult years,” said An­nette Dixon, vice pres­i­dent of hu­man de­vel­op­ment at the World Bank.

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