Human Capital in Ethiopia, Indonesia, and Trinidad and Tobago
Trends and policy implications
Human capital is the major component of wealth in most countries, accounting for 54% of national comprehensive wealth on average in 2018, according to the World Bank. In general, the share of human capital in total wealth tends to increase as countries develop economically.
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Human capital increased significantly in Indonesia and Ethiopia between 1995 and 2020 but stalled toward the end of the period.
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In Trinidad and Tobago, human capital declined precipitously after the 2008 global recession, essentially cancelling any gains the country had made in accumulating it prior to that period.
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Human capital represents more than half the stock of comprehensive wealth in all three countries. Thus, if nothing is done to bring it back to its historical rates of increase, well-being will eventually be compromised.
As part of a larger study on the comprehensive wealth of Ethiopia, Indonesia, and Trinidad and Tobago from 1995 to 2020, this policy brief explores trends in all three countries on human capital—the set of skills, knowledge, health, and experiences that individuals accumulate over their lifetimes.
After reviewing trends and the latest trajectories in human capital, the authors make concise policy recommendations for the three countries, touching on
- diversification in human capital
- investment to increase productivity in key sectors
- investment in education and health, as well as data capacity
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