Smart early childhood investments can build Sri Lanka’s future prosperity
Over the past year, many of the world’s leading health journals have weighed in on a topic that medical researchers rarely tackle: global economic policy. Research from the Lancet, the National Academy of Medicine, the British Medical Journal Public Health and many others has demonstrated the extraordinary economic returns from early childhood investments. Investing in children’s health, education and nutrition builds “cognitive capital”, which offers the most productive pathway to long-term economic prosperity.
Cognitive capital includes both intellectual abilities as well as social-emotional and self-management skills that enable creativity, adaptability as well as collaborative interaction—and the whole range of human capabilities. Cognitive capital cannot be mined, traded or arbitraged— societies must carefully cultivate it through the most forward-looking of policies supporting pre-natal and early childhood investments.
In the second half of the last century, Singapore, Malaysia and many other countries in East Asia (the “East Asian Tiger Economies”) grew rich by channelling unskilled labour into a rapidly expanding industrial base, sustaining for decades some of the highest economic growth rates the world has ever seen. Today, however, cognitive capital drives the most rapidly growing sectors of the modern economy. Most new wealth creation depends on intellectual assets—not factories and physical labour. A college dropout, tapping at a keyboard, can birth a company that grows to a market capitalisation of hundreds of billions of dollars. The Government of Sri Lanka’s guiding development plan – Vision 2025 – recognises this, aiming to build “a knowledge-based economy, which will be driven by our intellectual capabilities.”
Sri Lanka faces an opportunity to leapfrog the old economy and invest in the drivers of prosperity today. Human resources represent Sri Lanka’s most important economic asset. The richest countries in the world invest generously in early childhood development programmes, in order to sustain the rapidly rising productivity of their human resource base. Sri Lanka can leverage these lessons into a comprehensive strategy for inclusive social development and equitable economic growth.
The foundation of the human resource base depends on the first few years of children’s lives, when physical, cognitive, social and emotional growth is most rapid. Recent research in neural development proves that children's brains achieve 85 percent of their full capacity by five years of age. Ensuring optimal development of this cognitive capital requires healthy pregnancies, early childhood nutrition, care and stimulation, and a comprehensive package of investments to nurture children and ultimately build the foundation for success in school and then the labour market.
This is particularly important for Sri Lanka today. Over the past several decades, a demographic dividend has helped fuel Sri Lanka’s economic growth – similar to powerful demographic trends in China, Singapore, Malaysia and other countries. Falling fertility has caused the number of children dependent on each working age person to reduce by two-thirds since 1960. Further demographic change threatens this economic dividend. Sri Lanka’s population included eleven working age peo- ple for each person 65 years of age or older in 1990, but only six working age people for each older person today. In 2050, that number will fall in half. How can a country maintain rising living standards if fewer and fewer working age people support a rapidly growing population of older people?
Early childhood investments, with their powerful long-term effects on human capital development, can break this demographic trap by better enabling labour productivity to grow faster than the rate at which the population ages. This is especially relevant for Sri Lanka now, with the country benefitting from its peak demographic dividend today, creating the opportunities for new investments. But this window of opportunity is closing. Now is the best time to invest in children to build the long-term cognitive capital stock that can drive future prosperity.
What can Sri Lanka do today to reap these dividends? Some solutions require complex actions. Global lessons of experience demonstrate that the most effective early childhood investments involve comprehensive and integrated policies and programmes that work together to support developmental impacts. Health interventions, on their own, provide insufficient support. Stand-alone education initiatives offer limited scope for improvement. Fragmented interventions are both costly and lacking in adequate impact. When multi-sectoral approaches integrate health, education, nutrition, social protection, child protection and other investments, governments succeed in improving nutritional outcomes and building cognitive capital. This requires social ministries to work effectively together, building bridges across sectoral programmes.
At the programme level, integrated and comprehensive systems that link policy sectors together create synergies that multiply developmental impacts. For example, social protection enables families to more effectively access health, nutrition, water, sanitation, education and other vital services. The comprehensive system builds cognitive capital and better delivers equity, development and economic growth. In turn, these sectors strengthen the capacity of social protection to tackle poverty and vulnerability, and cognitive capital helps to break inter-generational poverty traps.
Other solutions are simpler. International evidence demonstrates that parenting and community-based programmes on early stimulation and care can complement nutrition, health and education investments and multiply impacts. Similarly, increasing resources to pre-school programmes, particularly in terms of providing adequate compensation to teachers in this most productive sector of education, can generate some of the greatest development returns – with the impacts enabling children to excel at primary level, progress to secondary school and succeed in higher education and future employment. Early childhood development (ECD) centres require high quality learning resources and safe and healthful facilities to generate these returns.
Sri Lanka’s social and economic choices have never been more daunting… or more promising. The nation’s future prosperity depends, now more than ever, on policy-makers recognising that equitable economic growth depends on vital investments in today’s children.
(The writer is the Director of Research at the Economic Policy
Research Unit.)