OromianEconomist

Human Capital in Ethiopia April 9, 2020

Despite the sharp improvements, human development indicators in Ethiopia remained low. In 2016, only 26 percent of births happened in a health facility (in the five years preceding the survey) and less than 40 percent of children had received all basic vaccinations. Only one in three
children 15-24-years-old had completed primary school, and over 25 percent of age-eligible children were not in school. As a result, Ethiopia ranks relatively low on the Human Capital Index.

With a HCI of 0.38, Ethiopian children born today can expect, as future
workers, to attain 38 percent of their potential productivity. With a score of 0.38, Ethiopia ranks 135th out of 157 countries. Relative to the comparator countries, Ethiopia scores at par with Uganda, better than Mozambique (0.36) and Rwanda (0.37), and worse than Tanzania (0.40) and Myanmar (0.47). Relative to its overall rank (135), Ethiopia scores lower on learning-adjusted years of school (4.5 years) and share of children not stunted (62 percent). Ethiopia however overperforms relative to its income level: Given GDP per capita, the human capital index in Ethiopia is higher what would be expected, reflecting the Government’s large investments in the health and education sectors.

During the October 2018 Annual Meetings, the World Bank launched the Human Capital Index. The Human Capital Index (HCI) is designed to capture the amount of human capital a child born today could expect to attain by age 18. The HCI has three components: (i) Survival, measured by the under-five mortality rate; (ii) Expected years of learning-adjusted school, measured by the quantity of education a child can expect to attain by age 18, corrected by a measure of learning quality-proxied by student achievement tests; and (iii) Health, measured by the stunting rate of
children under five and the probability of a 15-year-old surviving until age 60. The health and education components of the index are combined in a way that reflects their contribution to worker productivity, based on evidence from rigorous micro-econometric empirical studies. The resulting index ranges between 0 and 1. A country in which a child born today can expect to achieve both full health (no stunting and 100 percent adult survival) and full education potential (14 years of high-quality school by age 18) will score a value of 1 on the index. Therefore, a score of, for
instance, 0.5 signals that the productivity as a future worker for a child born today is 50 percent below what could have been achieved with complete education and full health.

Click here to read the World Bank’s ETHIOPIA POVERTY ASSESSMENT

World Bank (2020). Ethiopia Poverty Assessment: Harnessing Continued
Growth for Accelerated Poverty Reduction. Washington DC. © World Bank