Human Capital Index (HCI)

Human Capital Index (HCI) 

The World Bank has released a Human Capital Index (HCI) as part of the World Development Report 2019. Theme for the World Development Report (WDR) 2018: "The Changing Nature of Work".

Human Capital Project (HCP):

• As part of this report, the World Bank has launched a Human Capital Project (HCP).
• The HCP programe is claimed to be a program of advocacy, measurement, and analytical work to raise awareness and increase demand for interventions to build human capital.
• There are three components of HCP-a cross-country human capital measurement metric called the Human Capital Index (HCI), a programe of research to inform policy action, and a programe of support for country strategies to accelerate investment in human capital.

About Human Capital Index (HCI):

• The HCI has been constructed for 157 countries. It claims to seek to measure the amount of human capital that a child born today can expect to attain by age 18.
• The HCI index values are contended to convey the productivity of the next generation of workers, compared to a benchmark of complete standard education and full health.
• The HCI has three components:

1. Survival, as measured by under-5 morality rates.
2. Expected years of Quality-Adjusted School which combines information on the quantity and quality of education.
3. Health environment using two proxies of (a) adult survival rates and (b) the rate of stunting for children under age 5.

HCI Vs. HDI:

• UNDP constructs Human Development Index (HDI) for several years. The HCI uses survival rates and stunting rate instead of life expectancy as measure of health, and quality-adjusted learning instead  of merely years of schooling as measure of education.
• HCI also excludes per capita income where as the HDI uses it. Two significant changes from HDI are exclusion of income component and introduction of quality adjustment in learning. Exclusion of income element and introduction of quality adjustment makes HCI for less representative of human capital development than the index claims it to be.

Global performance:

• HCI measures the index outcomes for each country as a fraction of maximum value of 1. As expected the advance economics such as North America and Europe mostly have HCI value of above 0.75 , while South Asia and sub-saharan Africa has the lowest HCI among the regions.