For decades, global development strategies have followed a familiar path—build more schools, expand healthcare systems, and invest in skills development. The expectation was straightforward: strengthen institutions, and societies would prosper.
However, a new report by the World Bank is challenging that long-held assumption, revealing a troubling shift. In many parts of the developing world, progress in education and health is no longer advancing—and in some cases, it is reversing.
According to the report “Building Human Capital Where It Matters,” children today are learning less than they did a decade ago. At the same time, health outcomes are stagnating, and labour markets are failing to convert education into meaningful economic opportunity.
The findings suggest that the root of the problem extends beyond schools and hospitals. Human capital—the skills, knowledge, and health that drive economic growth—is not shaped solely in formal institutions. Instead, it is built through everyday experiences at home, within communities, and in the workplace.
From an early age, inequality begins to take hold. Children from less-educated households often start school at a disadvantage, with weaker language and numeracy skills. These early gaps, influenced by factors such as nutrition, access to learning materials, and stable income, can persist throughout life. Equally important are less visible influences—parental attention, interaction, and early cognitive stimulation—which play a critical role in development.
Even when education systems function effectively, these early disadvantages are difficult to overcome. Beyond the home, location further shapes outcomes. The quality of schools, access to healthcare, neighborhood safety, and social expectations all influence a child’s future. Research shows that children raised in more advantaged areas can earn significantly more than those from poorer neighborhoods, even when their family backgrounds are similar.
The workplace, often viewed as the final stage in skill development, is also falling short. In many developing economies, jobs provide limited opportunities for growth. Workers remain stuck in low-productivity roles where experience does not translate into better skills or higher income, gradually eroding their potential.
This stagnation has broader implications. Human capital accounts for roughly two-thirds of the income gap between wealthy and poorer nations. When it fails to grow, development itself slows down.
The report does not dismiss the importance of investing in education and healthcare. Rather, it emphasizes that these efforts alone are insufficient. A well-resourced school cannot fully offset poor nutrition at home. A strong healthcare system cannot eliminate the effects of unsafe living environments. And employment alone cannot build skills if the work offers no opportunity to learn.
Instead, the report calls for a shift in policy thinking—one that focuses on the environments people live in rather than isolated sectors. Homes, communities, and workplaces must be addressed as interconnected systems.
This means supporting families alongside improving local infrastructure, enhancing not just access to jobs but the quality of those jobs, and recognizing that human development is shaped by everyday conditions over time.
For years, development efforts have focused on building systems. The emerging challenge, the report suggests, is more complex: creating environments where human potential can truly grow.
