The Philippines Needs to Invest in Children’s Early Years to Boost Human Capital

MANILA – Increasing investment in children’s early development will improve the well-being of all Filipinos and strengthen the country’s economic potential, a World Bank report released on Monday said.

The report, The Philippines Human Capital Review: Investing in the Early Years to Boost Human Potential, describes the importance of health, nutrition, education, and social protection during the first decade of life. Investment in these areas boosts human capital, which is the accumulation of knowledge, skills, health, and experience that allows citizens to realize their potential as productive members of society.

“For the Philippines to successfully navigate the transition to an upper middle-income status, it will need to ensure that its population is equipped with the education, skills, and health necessary to meet the demands of a more complex and competitive economic landscape,” said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, the Philippines, and Thailand.

“The Philippines has a relatively young population, which can be a significant asset if the youth are well-educated and healthy. This demographic dividend can only be harnessed with adequate investment in human capital,” Diop added.

The demographic dividend refers to the economic growth potential that arises when the labor force is growing more rapidly than the population dependent on it. To realize that potential, countries must implement policies that invest in human capital and enable employment of the growing workforce, the report said.

But the Philippines is lagging its peers in the region, according to the World Bank’s Human Capital Index (HCI). The HCI measures the contribution of health and education to the productivity of the next generation of workers. Because of underinvestment in those key areas, Filipino children born today are projected to be only about half as productive when they reach adulthood as they could be.

The report finds several factors contributing to the productivity gap, including limited and unequal access to education and health services; low proficiency in foundational skills like reading, writing, numeracy, and problem-solving; pervasive poverty and inequality; and heightened vulnerability to natural disasters exacerbated by climate change.

World Bank Economist Toni Joe Lebbos said early childhood development is critical for human capital development, and a comprehensive national strategy is needed to extend essential “early years services” across the country.

“Early years services, such as nutrition programs and early childhood education, help ensure that children develop the necessary social, emotional, cognitive, and physical skills that will help them succeed in school and later in life,” said Lebbos.

Lebbos added that these interventions require firm national level commitment, greater collaboration among government agencies, digital transformation of service delivery, and inclusion of disadvantaged populations.

Local government units (LGUs) play a critical role in service delivery to boost human capital, and thus enhancing their capacity is an urgent priority. The report recommends targeted capacity building, budget support for lagging LGUs, and an equitable incentive mechanism to enhance LGU performance.