Human Capital, Evidence, and Resource Wealth

Human capital theory, developed principally by the American economists Theodore Schultz and Gary Becker in the early 1960s, treats investments in education, training, and health as analogous to investments in physical capital: they raise individual productivity and, in aggregate, national economic growth. Empirically, the payoff to education has proven substantial: the economist George Psacharopoulos, in influential cross-country studies conducted for the World Bank from the 1970s through the 2000s, estimated that each additional year of schooling raises individual earnings on average by roughly 9 to 10 percent globally, with returns typically highest for primary education in low-income countries. Global progress on access has been considerable — UNESCO data show the global primary school net enrollment rate rising from around 82 percent in 1990 to above 89 percent by the 2020s — yet a persistent "learning crisis" has drawn increasing attention since the World Bank's 2018 World Development Report devoted specifically to the topic: many children attend school for years without acquiring basic literacy, a phenomenon the Bank has quantified through its "learning poverty" indicator, estimating that over 70 percent of ten-year-olds in low- and middle-income countries could not read and understand a simple age-appropriate text by 2022, a share worsened notably by pandemic-related school closures.