Investing in human capital to reduce inequality in opportunity 

The greatest wealth of a nation is neither its geographical size, nor its natural resources, but its skilled human capital. And, this is truer in a highly populated, natural resource-scarce country like Bangladesh. Labour and entrepreneurship are two critical important ingredients of economic activities. But simple labour or half-hearted entrepreneurship cannot make economic activities dynamic, one needs human resources and innovative and creative entrepreneurship for that purpose.

First, the skills and capabilities of humans can effectively and successfully use other means of production. In the absence of human resources, the mere presence of land, machineries, and raw materials is nothing but a collection of some innate things. Second, in the development process, the impacts and contributions of technologies are crucial. But one requires appropriate human capital to properly use those technologies. In today's world with technological and digital revolutions, capable and relevant human resources are a must. Third, in the process of human civilization, the inventive power, creativity and innovation of humans played a major role.

But a major contribution that human capital development can make to the economy and the society is through its impacts on reducing inequalities. Inequalities are reflected on diverse planes - they are not only economic, but they also feature prominently in social, political and cultural arenas of a society as well. More importantly, inequalities occur not only in outcomes, but also in opportunities. The poor and the marginalized groups of a country are deprived of health facilities and educational opportunities. They have marginal access to resources, credit facilities and digital services. As a result, these groups also encounter deprivation in employment and income. Marginalized people who live on ecologically-fragile lands, also face different forms of deprivation. The lower castes among the Hindu population and the non-elites among the Muslim population face social discrimination on several fronts. The rural-urban discriminations in Bangladesh are well-known. Various deprived groups are also marginalized on political fronts and their voices, particularly those of the indigenous groups, are not reflected presented at the national level. On many occasions, the issue of religious discrimination has been raised in many fora and the concerns have been expressed for the lack of physical securities and religious freedom of religious minorities. These imply discrimination and in fact, all citizen of the country, irrespective their religion, caste and creed, have equal rights. Under such circumstances, investing in human capital in Bangladesh may help overcoming the country's inequalities in various opportunities.   

Illustration: TBS

How does the inequalities in various opportunities look like in Bangladesh? Let us start with educational opportunities. Disparities in educational opportunities are linked to the three-tier educational structure of the country. Overall, there are Bangla medium public schools, English-medium and a hybrid English and Bangla medium private schools and Madrsha education. English -medium schools represent elite education, with all kinds of facilities, but with a big price tag. On the other hand, public schools in district towns or in villages are for children from lower middle-class or poor households. Inequalities in access to educational opportunities is evident from different dataset. About 24 per cent people of Bangladesh have never gone to school and about 19 per cent has not completed primary education. Thus, the educational qualifications of 42 per cent of the population are below class V. More prominently, only 21 per cent of children from poor families complete upper secondary education, compared to 66 per cent in well-off households. Such inequalities in educational opportunities later on create disparities in capabilities, resulting in disparities in employment opportunities and employment outcomes.

The scenario of opportunities in health services is not any different. Again, with a health system comprising of public health facilities and hospitals, private clinics and availing of health facilities abroad, the health service opportunities become unequal at the outset. Thus, public health facilities and hospitals with poor services are meant for poor and marginalized people, the private clinics with better health services are used by the well-off families, and health facilities abroad with quality services, are availed by the rich and the super-rich. Such inequalities in health service opportunities are reflected in health outcomes too. Thus, the child mortality rate in the richest households of Bangladesh is 22 per 1,000 live births, while it stands at 39 per 1,000 in the poorest households.

Such disparities in opportunities also result in significant human resource wastage. For example, about 2 million young people of Bangladesh are unemployed, accounting for 79 per cent of the total unemployed population. About 8 million young people are not in education, employment, or training (NEET) - a lost potential for the country. Joblessness among the university graduates is on the rise - from 0.25 million in 2013 to 0.90 million in 2023, a more than a three-fold increase. Furthermore, during the past 12 years, the number of unemployed university graduates in Bangladesh has inflated by more than 4 times - from 2 lakhs in 2013 to 9 lakhs now. As the total number of unemployed people in the country is about 27 lakhs, one in every three unemployed people is a university graduate.

Given this background, a critical question the is: what can be done in building human capital to reduce inequalities in opportunities in Bangladesh. In this respect, investing in human capital is the key. But five considerations are important for that investment. First, indiscriminate, unplanned and non-strategic investments in human capital may in fact, widen the existing gaps in disparities in opportunities. For example, if more investments go for elite education or in private health clinics, the existing disparities in educational opportunities and health facilities will widen. Therefore, in order to reduce the gaps in opportunity inequalities, more specific investments in human capital must be in those areas and sectors where poor and the marginalized people seek services - as for example, public health facilities, public schools, basic social services. Furthermore, investments in human capital must be in software, for example, in doctors, nurses, service delivery services; and not in such hardware like buildings, physical infrastructures.

Second, while making specific investments in human capital, the concerns should not be on quantitative expansion only, but also in qualitative changes. For example, in the education sector, if investments are made in human capital with the objective of how many of the students are getting certificates, or how many teachers have been trained, then an important point is missed. The critical concern should be: how much skill and knowledge the students have acquired and what type of training the teachers have gotten. A similar point can be made for the health sector too. It is not the number of doctors or nurses, that is the only consideration, it is their skills, efficiency and effectiveness in their job. The point is, with our preoccupation with quantity, we should not forget the quality of human capital that the investment is expected to produce.

Third, investments in human capital need to be adequate so that such capital can make a dent on inequalities. But unfortunately, over the past 25 years, the education budget of Bangladesh has always been less than 2 per cent of GDP, and in 2025, it stands at 1.7 per cent of GDP. Similarly, during the same period, the health budget of the country has always been less than 1 per cent of GDP. In contrast, India spends 5 per cent of its GDP on education and 4 per cent of its GDP on health. In Vietnam, the education expenditure GDP ratio is 4 per cent and the health GDP ratio is 5 per cent. Human capital cannot be developed adequately with meagre resource allocations to health and education, as happens in Bangladesh. The country should spend 4 per cent to 6 per cent of its GDP on education and 5 per cent to 7 per cent of its GDP on health.

Fourth, the private sector and the non-government organizations also invest in human capital in their respective activities. They should be encouraged to expand it in targeted fashions so that the developed human capital can be used to tackle opportunity inequalities in opportunities. A model of public private partnership (PPP) can be efficient and effective. External development partners cane be asked to join the alliance. It will require institutional reforms in on several fronts. 

Fifth, human capital investments in Bangladesh should draw more from domestic resources. This is because dependence on domestic resources implies less strings and less burdens of interest in foreign currencies. Moreover, the efficiency in resource use through stopping resource leakages in effect would make more resources available for human capital formation for reducing inequalities in opportunities.

Inequalities are the defining issues of our time. And they manifest both in opportunities and in outcome. But whatever plane we think of, the inequalities in opportunities inform and influence the inequalities in outcome. Thus, the issue of inequalities in opportunities is on prime importance and investing in human capital to tackle the issue is the key.

Dr Selim Jahan is a former director of the Human Development Report Office and Poverty Division at the United Nations Development Programme, New York, US