Why investing in people is the recipe for growth and human solidarity

I recently gave a talk at Columbia University, and you might say I spent my whole life preparing for it. I’ve been a student of anthropology, a doctor caring for poor people in some of the poorest parts of the world, a university president, and now I have the honor being the president of the World Bank Group. 

All this experience has led me to believe that fighting poverty is the most critical mission any organization could have, and ending extreme poverty is something that is finally within our power.

My roots in post-war Korea convinced me that no country is a lost cause. I was born in 1959 in what was then one of the poorest countries in the world. Most mineral wealth and industry were located across the border in the north. Less than 20 percent of people were literate. Today, South Korea is one of the most advanced countries in the world. Its economy is not built on natural resources, but on the talents, skills, and knowledge of its people.

I believe every single poor country today has the potential to rise out of poverty like Korea. Every poor person deserves an opportunity to lift themselves out of poverty, as 1.1 billion have done in the last 25 years. But 800 million people still live on under $1.90 a day. How can they, too, escape extreme poverty?

Hope must be the moral choice

We must start by believing that every country, community, and person is worth helping. Hope cannot be the result of analysis; hope, belief, and optimism must be the moral choice.

I understand this to be true based on experience. As a co-founder of Partners in Health, I set out with Paul Farmer and Ophelia Dahl to bring health care to poor communities in Haiti, Peru, and other poor areas. We found HIV and drug-resistant tuberculosis – conditions the medical community considered too difficult and too costly to treat in developing countries. Almost universally, the medical community said there wasn’t enough money to pay for treatments. Some argued that poor people in Africa didn’t have watches, so they couldn’t adhere to drug regimens.

With the help of community health workers, we treated patients anyway—people like Joseph Jeune in Haiti. Joseph suffered from HIV and non-drug resistant tuberculosis. With anti-retroviral drugs, his transformation was miraculous. His case gained fame, and he inspired many – people in several other countries claimed him as their own. Joseph was Haitian, but he became Zambian; he became Namibian. He became the symbol of what was possible. Today, millions of people with HIV in developing countries are living productive lives with the help of anti-retrovirals. Joseph Jeune helped prove we shouldn’t give up on people because they are poor.

Building new foundations of human solidarity

The mission of Partners in Health – providing care, with a preferential option for the poor – was at its hear an effort to build new foundations of human solidarity. In their work fighting poverty around the world, the dedicated staff of the World Bank Group build new foundations of human solidarity every day. 

The World Bank was created in the aftermath of World War II and predicated on the notion that what affects one city, one country, one region can have immediate and lasting impacts on us all. This is as true today as it was seven decades ago.

In 2013, our 189 member countries supported two goals: to end extreme poverty by 2030, and boost shared prosperity among the poorest 40 percent around the world.

Today, we are focusing on three ways we will get there: by accelerating inclusive, sustainable economic growth; by building resilience to shocks and threats; and by investing more – and more effectively – in people.

We’re playing a critical role in finding win-win solutions, where we maximize financing for development, and create opportunities for the owners of capital to make higher returns. We will use our full range of financial tools to drive economic growth, protect countries from overlapping crises, and help countries make more – and more effective – investments in their people.

Helping people realize their potential can spur economic growth

We always knew that investing in people is the right thing to do; now we’re learning that, economically, it may very well be the smartest thing to do.

Too often, we still hear from leaders, “First we’ll grow our economies, then we’ll invest in our people.” But investing in people is investing in economic growth.

New research reveals that human capital – the stock of know-how, knowledge, and skills in a country – is a much more important part of the overall wealth of nations than previously understood. Briefly, here is what we found.

Human capital makes up the majority of wealth in high-income countries, a smaller percentage of overall wealth in middle-income countries, and an even smaller percentage in low-income countries.  

If you look at the top quartile – the top 25 percent of countries that have improved human capital the most, and you compare them with the bottom 25 percent – countries that have improved human capital the least – the difference is enormous.

We looked at the 25 years between 1991 and 2016 – the difference in economic growth was 1.25 percent of GDP each year over 25 years. We need to do more work and more research, but this suggests that looking backwards, investments in human beings have had a huge impact on economic growth.

This idea has been around for some time. But with better data, greater transparency in sharing that data, and new, more powerful analytic tools, we’re now understanding that the relationship between human capital and economic growth could be far more profound than we ever imagined.

In my talk at Columbia, I announced the Human Capital Project – an accelerated effort to help countries invest more – and more effectively – in their people. There is a sense of urgency, because we’re facing several human capital crises: around the world, 155 million children are stunted, which means they don’t develop properly; 250 million children cannot read or write, despite some schooling; 400 million people lack access to essential health services; and only one-third of the world’s poor are covered by social safety nets

On top of these current crises, countries need to urgently invest to build human capital because technological accelerations are changing the nature of work. Some studies estimate that as many as 65 percent of primary school children today will work in jobs or fields that don’t yet exist. So countries need to invest in developing skills people will need in the economy of the future, like critical thinking, problem solving, and life-long learning.

Economic mobility creates a more productive society

Investing more in people to build human capital can also help address one of the largest challenges of our time – lack of economic mobility.

We’re releasing a study that used new data sets covering 95 percent of the world’s population and most of the developing world. We found that the social status of one’s parents is just as influential today as it was 50 years ago in determining a person’s economic prospects. The 15 countries with the lowest economic mobility are developing countries, and in the average developing economy, education levels today are no better than the previous generation.

Increasing economic mobility will be critical because aspirations are rising all over the world. Nearly everywhere I travel, I see people on their smart phones. Our economists found that as people gain access the internet and have more exposure to how everyone else lives, their reference income – the income to which they compare their own – begins to change. Because of the internet, smart phones, and social media, there is a convergence of aspirations.

This new awareness could help create more vibrant and prosperous societies. Aspirations, linked to opportunity, can breed dynamism and inclusive, sustainable economic growth. But if there’s no opportunity to achieve one’s aspirations, the resulting frustration may very well lead countries down the path of fragility, conflict, violence, extremism, and eventually migration.

We need to do all we can to help people reach their highest aspirations.

In my five years as president of the World Bank Group, I’ve never been more optimistic that we can help people lift themselves out of poverty, and that the world can build new foundations of human solidarity.

If we invest the right resources and act with the fierce urgency that these times require, I believe that we can be the first generation in history to end poverty.