Economic Development

Spotlight on human capital: How health, education and income can drive economic prosperity

August 26, 2021

Global

Spotlight on human capital: How health, education and income can drive  economic prosperity

August 26, 2021

Global
Minakshi Barman
Analyst, The Economist Intelligence Unit

Minakshi is a consultant in The Economist Intelligence Unit's Consulting team. She is responsible for designing and managing research and strategy projects. Her recent research has focused on the Asian infrastructure finance market and urban disaster management. In one recent strategy project, she helped generate deep insights for market expansion through geospatial analysis and econometric modeling. She is an experienced economist with a demonstrated history of working on economic and public policy analysis projects. She has considerable experience in infrastructure appraisals and urban growth strategies. 
 
Before joining The EIU, Minakshi worked for KPMG as an economist, where she focused on cities and transport infrastructure projects. 
 
Minakshi holds an MA degree in Economics from Jawaharlal Nehru University, New Delhi and a BA degree in Economics from Presidency College, Calcutta University.

This report details the methodology and key findings of a research programme undertaken by The Economist Intelligence Unit (The EIU) between November 2019 and January 2020, commissioned by The Bill & Melinda Gates Foundation.
This research programme explores the potential linkages between human capital development and economic development, investigating whether there is a trade-off between human development and economic development, or whether they form a virtuous cycle. The EIU analysis contributes to the debate on the importance of human development and the extent to which countries should prioritise it in their national development strategies. It also contributes towards supporting policymakers to make informed choices about pursuing improvements in health, income and education for their populations.
 
This report examines whether gains in human development support economic development by examining the performance of a subset of countries , thus advancing the dialogue on the prioritisation of development goals. An empirical analysis of the countries—divided on the basis of income—highlights the importance of human capital development. The key findings are summarised below.
 
  • Both GDP and GDP per capita are positively correlated to human development. There is a positive correlation between total GDP and the HDI scores, and between GDP per capita and the HDI scores. Not only are the growth rates of HDI and GDP positively correlated, there is a strong positive correlation between the individual components of the HDI and GDP.
  • Countries that prioritise human development are more likely to transition to a virtuous cycle, where sustained growth and human development enhance one other, compared to countries that neglect human development.
  • Countries with better HDI scores have higher employment rates.
  • Improved human development results in higher wages, incomes and consumer expenditure.
  • Countries with higher HDI scores tend to display higher levels of industrial competitiveness.
 
The report was researched and written by The Economist Intelligence Unit team comprising of Minakshi Barman, William Davis, Ritu Bhandari and Sumer Sharma, with contributions from Simon Baptist, Stefano Scuratti and Michael Frank. Gaddi Tam was responsible for design and layout.
 

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