Human capital shapes our collective future. By investing wisely in people’s skills, health and education, nations can unlock unprecedented prosperity.
At its core, human capital comprises the stock of knowledge, skills and health embodied in individuals that enables value creation. It spans:
Research by BBVA shows that human capital explains around 75% of productivity gaps among OECD countries, making it a more important driver of productivity gaps than machinery or technology alone. The World Bank’s Human Capital Project underscores that investing in education, health, and social protection is essential for countries to compete effectively in the global economy and reduce inequality.
Public expenditure on human capital has risen dramatically over two centuries. In 1800, governments spent less than 1% of GDP on education and health combined; by 2025, this figure is about 9% of world GDP. Yet vast inequalities persist.
In 2025, Europe’s "social state" allocates around 44% of GDP to public expenditure overall, whereas Sub-Saharan Africa spends only 17%. Per-student funding gaps are stark: Sub-Saharan Africa invests just 3% of the per-capita level seen in Europe and North America, reversing earlier convergence trends.
Macro-historical studies estimate returns to human capital spending at roughly 10% or more, comparable to returns on formal education at the micro level. Impacts are larger for education than healthcare, and for public rather than private spending.
Low- and middle-income countries reap particularly high payoffs from scaling up public education and health. Higher human capital spending over long periods is linked to productivity convergence; stagnation in spending perpetuates persistent gaps in productivity outcomes. These findings reaffirm that human capital is not just a moral imperative but a high-return economic investment.
The World Inequality Lab simulates two futures. In a "global convergence" scenario, total human capital expenditure (public and private) reaches 35–40% of GDP by 2100, driving global productivity toward about €100/hour in all regions. This path is deemed both plausible and desirable global convergence, given rapid advances in research, life expectancy, and higher education demands.
Under a “business-as-usual” scenario, spending stagnates at 2010–2025 levels. Resulting productivity gaps remain vast, and even rich countries face slower growth. These contrasting outcomes illustrate how policy choices today ripple through generations.
Demography interacts powerfully with human capital. Developed nations face aging populations, while by 2050 one in three working-age people will be African. Africa’s youth bulge can become a demographic dividend if coupled with robust investments in school systems, vocational training and healthcare.
Meanwhile, technology and the green transition are projected to create 170 million new jobs by 2030, equal to 14% of current employment. At the same time, automation may displace 92 million roles. Success hinges on continuous skills upgrading, lifelong learning and adaptable social protection.
Governments worldwide are crafting diverse strategies to nurture human capital:
Examples include Rwanda’s human capital development strategy emphasizing digital skills, Finland’s integration of wellbeing metrics into policy, and Chile’s reforms to boost school quality equity. At the global level, the UN Sustainable Development Goals provide a framework for coordinated action.
Private sector leaders recognize that workforce capabilities drive innovation and competitiveness. Companies are investing in upskilling initiatives such as internal academies, mentorship programs and partnerships with educational institutions. Some multinationals link executive compensation to workforce development metrics, reflecting a shift toward long-term human capital value over short-term profits.
Civil society and non-profits also play pivotal roles, filling gaps where governments lack capacity. Tech philanthropies fund coding boot camps and remote learning platforms, while health NGOs support community clinics and telemedicine in underserved regions.
Failing to invest adequately in human capital risks entrenching poverty, fueling social unrest and undermining resilience in crises. Regions with low spending face workforce shortages, higher healthcare burdens and reduced adaptability to technological change.
Global inequality in human capital inputs perpetuates inequality in outcomes. Without decisive action, opportunities for millions of children and young adults may remain unrealized, compromising ambition for inclusive, sustainable growth.
Investing in human capital is a long game with exponential returns. To realize a future of shared prosperity, stakeholders must collaborate across sectors and borders. Governments need sustainable fiscal plans that protect and expand education and health budgets, while corporations and philanthropies should scale innovative programs that boost skills and wellbeing.
By embracing a holistic, life-cycle approach—from early childhood through adulthood—and leveraging data to guide equitable resource allocation, we can chart a course toward robust productivity, social cohesion and resilience. Ultimately, the degree to which humanity thrives in the coming decades hinges on our collective commitment to nurture, empower and invest in people—the greatest asset we have.
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