…Report identifies homes, neighbourhoods and workplaces as critical environments for building productive populations
The World Bank has warned that human capital development is stagnating in many low- and middle-income countries, calling for a fundamental shift in how governments invest in people’s health, knowledge and skills.
In its 2026 publication, Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces, the World Bank argues that conventional investments in education and healthcare, while essential, are insufficient to address the growing human capital challenge.
The report, edited by Alaka Holla, Norbert Schady and Joana Silva, identifies three interconnected environments that significantly influence human development: the home, the neighbourhood and the workplace.
According to the publication, two-thirds of low- and middle-income countries have experienced a decline in at least one key dimension of human capital development over the past 15 years.
Student learning outcomes have stagnated, with performance in most countries worse today than in 2010. The report also identifies declining average adult height in several countries as an indication of deteriorating underlying health conditions.
The employment outlook is equally concerning. Only about 40 per cent of women are in paid employment, while nearly one in five young people are neither working nor studying.
The World Bank estimates that differences in human capital account for roughly two-thirds of the income-per-capita gap between rich and poor countries.
The report identifies the home as the foundation of human capital accumulation, particularly during early childhood. It finds that children whose mothers have higher educational attainment generally perform better in vocabulary and mathematics assessments. These differences emerge before children reach the age of five and persist throughout childhood and adolescence.
The report emphasises that household resources alone are insufficient. Children also require nurturing, parental attention, emotional support, early learning opportunities and protection. It recommends expanding employment opportunities and income support for poor households, alongside parenting programmes, quality preschool services and investments in girls’ education.
The World Bank also highlights the role of neighbourhood conditions in shaping educational attainment, health and future earnings. Access to quality schools, healthcare, clean water, sanitation, safe streets and employment opportunities varies significantly across communities.
Evidence from Brazil shows that children from low-income families who grow up in wealthier neighbourhoods earn approximately twice as much in adulthood as those raised in poorer neighbourhoods.
The report also highlights how pollution, inadequate sanitation and exposure to violence can undermine children’s development and limit economic mobility. It therefore recommends targeted investments in struggling neighbourhoods to improve public services, environmental quality and social capital.
The report argues that human capital development continues long after formal education ends. It estimates that half of the human capital accumulated over a lifetime is acquired at work through experience, training and interaction with colleagues.
However, about 70 per cent of workers in low- and middle-income countries are employed in small-scale agriculture, low-quality self-employment or microenterprises with limited opportunities for structured learning.
The report finds that earnings increase only about half as much among self-employed workers as among salaried employees for the same increase in work experience. It recommends expanding apprenticeships, employer-provided training, business skills development and opportunities for workplace learning.
Importantly, Nigeria is among the countries cited alongside Colombia and Côte d’Ivoire where large-scale apprenticeship programmes have increased both skills and earnings. The report also highlights evidence from India, where soft-skills training increased the productivity of trained garment workers by more than 13 per cent, with additional productivity gains among untrained colleagues.
The publication identifies inadequate childcare, unsafe transportation, restrictive social norms and limited employment opportunities as major barriers to women’s participation in the labour market. It therefore recommends expanding access to quality childcare, improving transport safety, strengthening job-placement services and promoting apprenticeships.
For young people, the report advocates stronger connections between education, practical training and employment opportunities.
The World Bank argues that governments must move away from fragmented programmes towards coordinated interventions that address the constraints people face across their homes, neighbourhoods and workplaces.
For instance, tackling childhood malnutrition requires more than healthcare services. Families need adequate income, nutritious food, clean water, sanitation and employment opportunities that enable parents to provide for their children.
The report recommends stronger coordination across health, education, agriculture, transport, sanitation, social protection and labour institutions.
It also highlights the importance of social registries, integrated service centres and case management systems to identify vulnerable households and connect them with appropriate support.
The publication calls for stronger national data systems to monitor human capital outcomes and guide public investment.
