The purpose of this paper is to provide an analysis of the importance of Human Capital Index for the socio-economic condition of a country, and why governments and private institutions should closely monitor and follow these factors using the example of Georgia.
According to the World Bank, Human capital consists of the knowledge, skills and health that people invest in and accumulate throughout their lives, enabling them to realize their potential as productive members of society.
Besides the fact that investments in financial assets and physical capital traditionally dominates in economic relations, human capital still plays an important role in ensuring economic growth, productivity and innovation.
The Human Capital Index (HCI) was launched by the World Bank in 2018 as a measurement of economic success. The index ranks member countries according to outcomes they achieve in health and education, and highlights how this progress can help improve the productivity of the new generation of workforces.
According to HCI 2020 report, nearly 60% of children born today would be just half as productive as they would have been with full education and healthcare. This reflects a serious crisis in human capital especially in developing countries, with major implications for economic growth and the global effort to end extreme poverty by 2030.
The government must ensure that all children receive a comprehensive package of education and healthcare services during critical periods of childhood to achieve their full potential. Policymakers must ensure that youth are well prepared to enter the labor market as healthy, skilled and productive adults, and are able to acquire necessary knowledge and professional competencies.
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