Human Capital
Investments in human capital can drive sustainable growth and poverty reduction, creating more resilient societies.
What Is Human Capital?
As shocks and stressors increase in frequency and intensity, developing and strengthening the skills of individuals through human capital investments is critical. According to the Organisation for Economic Co-Operation and Development, human capital can be defined as “the knowledge, skills and other personal characteristics embodied in people that helps them to be productive.”
Investments in human capital can drive sustainable growth and poverty reduction, creating more resilient societies. Developing human capital involves investing in social services and essential service delivery, focusing on:
- Nutrition
- Health care
- Education, both formal and informal
- Financial literacy
- Employment
- Professional training and development
Why Does Human Capital Matter?
The 2019 WDR emphasizes the primacy of human capital in meeting the challenge of the role of technology in the workplace.
How Is Human Capital Measured?
Tracking factors including education and health are key to measuring human capital. The World Bank Group’s Human Capital Index (HCI) measures the contribution of health and education to the productivity of both individuals and countries. The HCI is “a summary measure of the amount of human capital that a child born today can expect to acquire by age 18, given the risks of poor health and poor education that prevail in the country where she lives.” The HCI can be utilized to generate scenarios and accurately predict the future income of both individuals and countries. Learn more about how the HCI works and read its 2020 update.
USAID's Investments in Human Capital
USAID’s multisectoral work related to strengthening the resilience capacities of individuals, institutions, communities and countries plays a key role in improving human capital. See below for examples of USAID investments in human capital.
Increasing Women’s Roles in Agricultural Decision-Making through Human Capital Development
The Feed the Future Advancing Women’s Empowerment (AWE) Program sought to understand women’s decision-making roles in agriculture and food systems, as well as to identify the ways in which women’s economic empowerment (WEE) can be improved.
AWE found evidence that human capital in the form of education and access to knowledge, information and training often positively determines women’s decision-making power. For example, an AWE research study that examined the influence of education on women’s decision-making power in Nigeria found that women’s level of education was positively and significantly related with their level of contribution to household farming decisions.
Strengthening Human Capital through Sustainable Fishery Management in Ghana
The USAID/Ghana Sustainable Fisheries Management Project (SFMP) aimed to rebuild marine fisheries through the adoption of responsible fishing practices. SFMP encouraged responsible fishing practices through the development of human capital, including by:
- Improving enabling conditions for fishery co-management
- Strengthening information systems and science-informed decision-making
- Increasing political and public support to rebuild fish stocks
- Implementing applied management initiatives
