Declines in Health and Education in Poor Countries ‘Harming Earning Potential’

Why It Matters

Stalled human‑capital development curtails labour productivity and limits economic growth in developing economies, directly reducing lifetime earnings for the next generation.

Key Takeaways

• 86 of 129 LMICs saw human capital decline 2010‑2025
• Children could earn 51% more with improved human capital
• 70% of workers in low‑income economies in low‑skill jobs
• Female labor participation remains low, 40% unemployed
• Policy must target homes, neighborhoods, and workplaces

Pulse Analysis

The World Bank’s latest analysis paints a stark picture of eroding human capital across low‑ and middle‑income countries. Between 2010 and 2025, 86 of the 129 economies surveyed experienced declines in health, education or workplace learning, a trend that directly depresses future earnings. The report quantifies the loss: children born today could earn roughly 51 percent more over a lifetime if their nations matched the human‑capital performance of the best peers at similar income levels. This earnings gap underscores how deteriorating nutrition, schooling and skill development translate into lower labour productivity and slower economic expansion.

The study isolates three environments where interventions can reverse the slide: homes, neighborhoods and workplaces. In the home, inadequate caregiving—exemplified by left‑behind children in China—correlates with poorer test scores and higher depression despite higher household incomes. Neighborhood effects are equally potent; residents of gang‑controlled blocks in San Salvador earn less and attain less education than those just 50 metres away. At work, 70 percent of workers remain in small‑scale agriculture or micro‑firms that offer scant on‑the‑job training, while 40 percent of women are not employed at all, limiting gender‑inclusive growth.

Policy prescriptions emerging from the report stress coordinated action across the three settings. Parenting support, clean‑water provision, and community safety programs can raise early‑life health and learning outcomes, while apprenticeship incentives and formal training schemes can upgrade the skill base of informal workers. The World Bank points to outliers such as Jamaica, Kenya, Kyrgyzstan and Vietnam, where targeted investments have yielded higher human‑capital scores despite comparable income levels. As the United States reevaluates its aid stance, the Bank’s pivot toward job creation and economic growth offers a pragmatic framework for donors and governments seeking to unlock latent earnings potential in the developing world.

Declines in health and education in poor countries ‘harming earning potential’

World Bank says children born today could earn 51 % more over lifetime if their country’s human capital improved · Heather Stewart · Economics editor · Thu 12 Feb 2026 10:06 EST

Deteriorating health, education and training in many developing countries is dramatically depressing the future earnings of children born today, the World Bank has said.

In a report, the World Bank urges policymakers to focus on improving outcomes in three settings: homes, neighbourhoods and workplaces.

The report, Building Human Capital Where it Matters, finds that in 86 of 129 low‑ and middle‑income countries health, education, or workplace learning declined between 2010 and 2025.

Analysing the links with earnings, the World Bank says children born today in low‑ and middle‑income countries could earn 51 % more over their lifetime if their country’s human capital matched that of the best‑performing nations at similar income levels.

“The prosperity of low‑ and middle‑income countries depends on their ability to build and protect human capital. Right now, we see that many countries are struggling to improve nutrition, learning and skills of their current and future workforce, which raises concerns about labour productivity and the types of jobs their economies can sustain in the future,”

— Mamta Murthi, Vice‑President for People, World Bank

Workers spread out over the land, picking tea leaves

(Photograph: Tuul and Bruno Morandi/Alamy)

As many as 70 % of workers in low‑ and middle‑income countries are in small‑scale agriculture, low‑quality self‑employment, or micro‑firms.

Evidence of this troubling deterioration includes the fact that in several sub‑Saharan African countries the average adult is shorter today than 25 years ago, pointing to a decline in underlying health.

Meanwhile, children across low‑ and middle‑income countries are achieving lower learning outcomes than 15 years ago, with the worst decline in sub‑Saharan Africa.

The 140‑page analysis draws on recent research to tease out a range of factors that affect human capital, from stunting in childhood due to malnutrition to the presence of criminal gangs in local neighbourhoods.

In the home, research shows that the quality of care families can provide has long‑lasting effects. The World Bank references the millions of children in China being cared for by relatives while their parents move away to seek work, noting that “these left‑behind children live in homes with higher household income, but they do worse on tests of mathematics and language and exhibit higher levels of depression.”

The prevalence of crime in neighbourhoods also matters. The report cites research showing that “in San Salvador, people living in gang‑controlled neighbourhoods had fewer assets, less income and lower educational attainment even relative to people living only 50 metres away.”

In the workplace – another setting where the Bank says human capital should be built up through training and experience – the report points out that 40 % of women in low‑ and middle‑income countries are not in employment at all.

For those in the workplace, as many as 70 % are in “small‑scale agriculture, low‑quality self‑employment, or micro‑firms”, which generally offer “limited formal training and few on‑the‑job learning opportunities”.

The report recommends a wide range of policies to tackle these shortfalls, from parenting support to providing clean water to creating incentives to encourage apprenticeships.

It also highlights that countries at similar income levels can vary significantly in human capital – citing Jamaica, Kenya, Kyrgyzstan and Vietnam as success stories.

With the US administration sceptical about the value of international aid, the president of the World Bank, Ajay Banga, has reframed the Washington‑based institution’s role to focus on jobs and economic growth.