EA News Economic Development

Progress in nutrition, learning, and skills development, the foundations of human capital has slowed or even reversed in many low and middle income countries. This worrying trend threatens not only individual wellbeing but also long-term economic growth and national resilience.

A new report from the World Bank Group, Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces, brings fresh attention to this challenge. Rather than looking at human capital in abstract policy terms, the report focuses on the real-life environments where people actually build skills and capabilities: at home, in their communities, and in the workplace.

Human Capital: More Than Schools and Clinics

For years, investments in education and health have been central to development strategies. But the report highlights a critical gap: learning does not happen only in classrooms, and wellbeing is not shaped only in hospitals.

Children’s development is shaped by nutrition and stimulation at home. Young people’s aspirations and exposure to opportunity are influenced by their neighborhoods. Adults build (or lose) skills depending on the quality of jobs and workplace learning opportunities available to them.

When these environments are weak due to poverty, limited services, or fragile labor markets, progress in human capital can stall, even if formal education or health access improves.

What the New Human Capital Data Reveals

The event launching the report also introduces an expanded Human Capital Index (HCI+), providing deeper regional and country-level insights into where countries are falling behind in health, education, and labor market outcomes.

This expanded data highlights a troubling reality: many countries are not just progressing slowly — they are losing ground. Learning losses, poor nutrition, and limited access to productive work are combining to reduce the future productivity of entire generations.

For governments and development partners, this means that traditional approaches may no longer be enough. Simply expanding access to schooling or training programs will not deliver the expected results if young people return to environments that limit their ability to apply and grow their skills.

The Missing Link: Skills That Connect to Real Work

One of the strongest messages from the report is the importance of linking human capital development to real economic opportunity. Skills have the greatest impact when they are built and used in environments that reinforce learning especially in workplaces.

This is where enterprise development becomes central. Small and growing businesses are not just economic actors; they are also learning environments. They are where young people gain practical experience, where workers refine their capabilities, and where innovation and adaptation happen daily.

Strengthening micro, small, and growing businesses therefore contributes directly to human capital. When enterprises are supported to grow, formalize, and improve productivity, they create better learning and earning environments for the people who work in them.

From Research to Action

The report’s core message is forward-looking: evidence must translate into policy, investment, and action. Governments and partners are being called to rethink how and where human capital is built.

This means:

• Investing in early childhood and family wellbeing

• Strengthening neighborhoods and local economic ecosystems

• Expanding access to quality jobs and enterprise opportunities

• Supporting workplace-based learning and skills development

Human capital is not built in isolation. It is shaped by systems — social, economic, and institutional. Reversing stagnation will require coordinated action across these systems, especially those that connect learning to livelihoods.

At a time when many countries face youth unemployment, economic shocks, and widening inequality, rebuilding human capital is urgent. The environments where people live, learn, and work must become engines of growth rather than barriers to opportunity.

For organizations working in skills development and enterprise growth, this is both a challenge and an opportunity. By designing programs that connect skills to real market opportunities and stronger local economies, we can help ensure that investments in human capital lead to lasting impact.

Credits: Insights referenced from the World Bank Group report Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces and the launch of the expanded Human Capital Index (HCI+).*

The Stalling of Human Capital

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