Children born today in low and middle-income countries will lose 51 percent of their potential lifetime earnings due to deficits in nutrition, learning, and workplace skill development, according to a World Bank Group report released Thursday in Washington.
The report, titled Building Human Capital Where It Matters: Homes, Neighborhoods and Workplaces, reveals that 86 out of 129 developing countries experienced declines in either nutrition, learning, or workforce skill development between 2010 and 2025. The findings come despite rising incomes and declining poverty rates across these nations during the same period.
The World Bank launched an expanded measurement tool alongside the report. The Human Capital Index Plus (HCI+) now tracks human capital accumulation from birth to age 65, capturing for the first time how gains or losses in the labor market affect lifetime productivity. The index provides country and regional data showing how gaps translate into forgone future labor earnings.
Three Settings Drive Human Capital Development
Mamta Murthi, World Bank Group Vice President for People, emphasized the need to expand investments beyond traditional education and health systems. She stated that broadening investments to include the home, the neighborhood, and the workplace can activate settings that shape people’s lives and increase overall human capital accumulation.
The report identifies critical deficits across three environments. In homes, skill gaps linked to family circumstances emerge before age five, before most children in low and middle-income countries start school, and remain virtually constant throughout adolescence. The report found high rates of violent discipline at home, suggesting significant room for improvements in care environments. Income alone does not offset poor care environments, which lower test scores and increase depression.
In neighborhoods, new evidence reveals that children who grow up in wealthier neighborhoods earn twice as much as those from poorer ones, even when their parents share the same income and education levels. Neighborhoods shape opportunities beyond access to schools and clinics. Exposure to pollution, crime, or poor infrastructure directly affects health, learning, and skills development.
In workplaces across developing countries, self-employed workers earn only half as much for each additional year of experience compared to wage workers. Yet 70 percent of workers in these countries are in small-scale agriculture, low-quality self-employment, or micro firms offering limited formal training and on-the-job learning. Labor force participation gaps further limit skill accumulation, with around 50 percent of women out of the labor force and around 20 percent of youth neither studying nor working.
Resources Alone Cannot Explain Performance Gaps
The HCI+ data demonstrates that countries with similar income levels show dramatically different scores on the Human Capital Index, suggesting resources alone are not holding back human capital accumulation. High performers for their income levels include Jamaica, Kenya, Kyrgyz Republic, and Vietnam.
The index also reveals clear gender gaps. When computed for the female population only, the HCI+ score is 20 points lower than for the male population, with the gap largely explained by differences in labor market participation and quality of jobs.
Norbert Schady, World Bank Group Chief Economist for People, explained that policies considering the drivers of human capital in each setting can improve nutrition, learning, and skill development at work. By enabling more people to build skills throughout life, countries can spark a virtuous cycle where rising productivity leads to higher wages and greater incentives for families and communities to invest in the next generation.
Implications for Ghana’s Human Capital Strategy
Ghana has historically struggled with human capital quality despite investments in education and health infrastructure. A 2019 World Bank Human Capital Index assessment found Ghana’s HCI at 44 percent, four points higher than the sub-Saharan Africa average of 40 percent but below the 48 percent average for Lower Middle-Income Countries (LMICs).
The report revealed that although expected years of schooling for children in Ghana was 11.6 years compared to 8.6 years average for sub-Saharan African countries, 5.7 of those years were lost because of poor learning outcomes in Ghanaian schools. With a harmonized test score of 307, Ghana fell significantly short of the 391 average score for peers in LMICs.
The new HCI+ framework, which now tracks human capital development through working age, provides Ghana with additional tools to measure returns on education investments across the entire lifecycle. The focus on homes, neighborhoods, and workplaces aligns with challenges Ghanaian policymakers have identified around early childhood development, urban-rural disparities, and informal sector productivity.
Ghana’s labor force characteristics mirror patterns highlighted in the World Bank report. A substantial portion of workers operate in the informal sector with limited access to structured training and skill development opportunities. Youth unemployment and underemployment remain persistent challenges, with many young people neither in education, employment, nor training.
Policy Recommendations Target Real-World Settings
The World Bank report recommends four strategic interventions. First, parenting and preschool programs should promote early learning and improve children’s care environments. Second, struggling neighborhoods require targeted interventions with a focus on increasing nutrition, learning, and on-the-job skill development through collaboration among all government departments, not just those focused on education and health.
Third, labor market reforms should expand apprenticeships, childcare, and on-the-job learning opportunities. Fourth, governments should promote policies that integrate public services within homes, neighborhoods, and workplaces, supported by an ambitious data agenda to track progress.
The report emphasizes that two-thirds of low and middle-income countries experienced declines in nutrition, learning, or workforce skills over the past 15 years even as incomes rose and poverty declined. This suggests that economic growth alone does not automatically translate into human capital development without deliberate policy interventions.
Measuring Progress from Birth to Retirement
The expanded HCI+ represents a significant methodological advance in measuring human capital. Previous iterations focused primarily on children and adolescents, measuring the amount of human capital a child born today could expect to attain by age 18. The new index extends this measurement through age 65, providing a comprehensive view of human capital accumulation and depletion across the working life.
For policymakers, the HCI+ offers a metric for how gaps translate into forgone future labor earnings, making the economic cost of underinvestment in human capital more tangible. The index allows countries to simulate policy changes and identify evidence-based interventions that improve health, learning, earnings potential, employment outcomes, and overall economic productivity.
The World Bank Human Capital Project, launched in 2018, now includes a network of 96 governments committed to investing in human capital at the highest levels. The project has shaped World Bank Group operations totaling more than 13.92 billion dollars in lending across 52 financed operations informed by Human Capital Trust Fund activities.
Economic Competitiveness Hinges on Workforce Quality
The report arrives at a critical moment for developing economies seeking to compete in increasingly knowledge-intensive global markets. Countries with weak human capital face limited ability to attract high-value industries, support technological innovation, or move up global value chains.
For Ghana, which has articulated ambitions to achieve middle-income status and diversify beyond primary commodity exports, the human capital challenge carries particular urgency. The country’s ability to support industrialization, develop a competitive services sector, and participate in the digital economy depends fundamentally on workforce capabilities.
President John Dramani Mahama’s administration has emphasized human capital development through policies including the 24-hour economy initiative aimed at creating quality jobs and expanding skills training opportunities. The World Bank’s framework for targeting homes, neighborhoods, and workplaces provides additional analytical tools for designing interventions.
The report’s emphasis on workplace learning highlights opportunities for partnership between government, employers, and training institutions to expand apprenticeships and on-the-job skill development. Such programs can address the gap between formal education outcomes and employer needs while providing pathways for youth employment.
Gender Dimensions Require Specific Attention
The 20-point gap between male and female HCI+ scores documented in the report reflects broader challenges around women’s labor force participation and access to quality employment. In many developing countries including Ghana, women face barriers to workforce entry and advancement including childcare responsibilities, discrimination, and limited access to credit and business development services.
Addressing gender gaps in human capital requires interventions spanning multiple domains. Expanding childcare services can enable women to participate in formal employment and access training opportunities. Workplace policies around maternity leave, flexible work arrangements, and protection from discrimination support women’s career advancement.
Educational interventions that encourage girls’ participation in science, technology, engineering, and mathematics can expand access to higher-paying technical careers. Legal reforms ensuring equal pay for equal work and inheritance rights support women’s economic empowerment.
Data Infrastructure Critical for Monitoring Progress
The World Bank report calls for an ambitious data agenda to track human capital progress across homes, neighborhoods, and workplaces. Many developing countries lack robust systems for measuring learning outcomes, tracking workforce skills, or monitoring neighborhood-level development indicators.
Ghana has made progress in data collection through instruments including the Ghana Living Standards Survey, Multiple Indicator Cluster Surveys, and educational assessments. However, gaps remain in tracking on-the-job skill development, measuring neighborhood effects on child development, and monitoring home environment quality systematically.
Strengthening data infrastructure enables evidence-based policymaking, allows countries to benchmark progress against peers, and supports accountability for human capital investments. The HCI+ platform provides tools for countries to simulate policy changes and identify high-impact interventions based on their specific circumstances.
Virtuous Cycle Links Productivity to Future Investment
The report’s concept of a virtuous cycle connecting productivity, wages, and family investment offers a framework for understanding how human capital development can become self-reinforcing. When workers acquire skills that increase their productivity and earnings, they gain resources and incentives to invest in their children’s education and health.
Conversely, low human capital can trap families and communities in a vicious cycle where limited skills lead to low earnings, reducing capacity to invest in the next generation. Breaking this cycle requires coordinated interventions across homes, neighborhoods, and workplaces to jump-start human capital accumulation.
For Ghana and other developing countries, the report underscores that human capital development represents both a moral imperative and an economic necessity. Children’s right to quality education, healthcare, and opportunity cannot be separated from the economic reality that national prosperity depends on workforce capabilities.
The World Bank’s call to action extends beyond traditional education and health ministries to encompass housing, urban planning, labor, and economic development agencies. Building human capital where it matters requires whole-of-government approaches recognizing that homes, neighborhoods, and workplaces shape life opportunities as profoundly as schools and clinics.
As Ghana and other nations confront the challenge of building competitive economies capable of generating quality jobs and shared prosperity, the evidence presented in this World Bank report offers both a sobering assessment of current deficits and a roadmap for action. The 51 percent earnings loss documented for children born today in developing countries represents an enormous waste of human potential, but also an enormous opportunity for policy interventions that can unlock that potential and transform economic trajectories.
