Maximizing Human Capital by Aligning Investments in Health and Education

This discussion paper was commissioned by the Health Finance and Governance Project (HFG) of the United States Agency for International Development (USAID). The timing of the analysis was triggered by the forthcoming launch of the World Bank Human Capital Index in October 2018. The international community, including USAID, has deep interest in this index as maximizing human capital is an imperative element in the journey to self-reliance. Therefore, it is important to discuss what further actions ministries of health, education, labor, youth, and finance can take to align investments and efforts to improve the human capital potential of its population. This paper analyses how key health and education investments have the potential to maximize human capital in low-resource settings especially if they are made in a well-timed and coordinated manner. The analysis draws upon two recent major reviews of human development, references 136 original scientific papers and reference sources, and is further informed by qualitative interviews with 24 content experts across 17 institutions.

This paper identifies five key messages:

1. The scale of the contribution of human capital to national economic growth and stability has been significantly under-recognized;
2. Effective human capital development requires synergistic investment in health and education across the life course;
3. There are critical failures in the design of current approaches to investment in human capital;
4. There is a strong evidence base on the most cost-effective ways to maximize human capital by investing strategically in both health and education; and
5. There are key actions that can be taken by both health and education programs during the first 8000 days of life to maximize the development of human capital.