THE BLOG
20/04/2018 17:20 BST | Updated 20/04/2018 17:21 BST

Why The World Needs A Way Of Measuring The Effectives Of Countries’ Investments In Their Own People

To ensure UK aid is not just “spent well”, but “could not be better spent” we must ensure that the money we give builds that progress

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Countries need to invest in their most important asset – their own people – and it pays to start early.

Children, who receive the right nutrition early on in life, learn much more effectively when they start school. This in turn has a huge knock-on effect on their ability to thrive in the workplace as an adult.

Vietnam is a shining example of a country which has invested in its own people in the last two decades, and has reaped huge benefits. It has focused on providing proper nutrition and quality education and the number of stunted children in the country fell by nearly 60% between 1985 and 2013, while pupils in its schools are now learning two times more each year than their peers in other countries with higher income levels.

As I laid out in my new development offer earlier this month, our focus should be on helping developing countries stand on their own feet, grow their economies, collect taxes and build sustainable health and education systems. To ensure UK aid is not just “spent well”, but “could not be better spent” we must ensure that the money we give builds that progress.

That’s why I strongly support the World Bank President Jim Kim’s plan for a Human Capital Index. This is a way of measuring how effective countries’ investments in their own people actually are. We should recognise and reward countries which are getting this right, and incentivise and support the rest to make the big shift that’s needed. Crucially, the index will allow countries to identify areas where they can invest to make big changes. 

Donors, such as the UK, should ensure that the projects and programmes we fund become more than the sum of their parts. The sooner we can help nations build sustainable public services the better. After all, weak healthcare systems in the developing world are not just a danger for the people that live there – they pose a risk to us all. And many countries are stepping up. Countries like Ghana and Kenya are leading the way in enrolling more poor people in their national health insurance schemes so that they can get the services they need – from both public and private providers – to keep them healthy.

This progress can only happen if we move nations from aid to trade, and build strong tax systems. 

UK aid together with HMRC is supporting tax reform in five tax trailblazer countries: Rwanda, Pakistan, Ethiopia, Ghana, Uganda, and we want to do more. 

We should recognise that inclusive free trade and the creation of jobs and livelihoods is the most reliable bringer of peace and has made the greatest contribution to the massive improvements made in the last two decades in reducing the number of people living in extreme poverty. 

Finance ministers who have been keen to outsource their responsibilities to donors are starting to realise their country is missing out on the next wave of investment and growth because other countries’ people are a better draw.

And those nations shouldering additional burdens, looking after refugees and displaced people, as well as their own also need recognition for the immense service they do. 

Jim Kim’s Index will be invaluable for UK aid and others in being able to implement this approach.

And to maximise its potential to encourage development as well as the return on British taxpayers funds, I would urge all investors to be guided by it.

Only by being hard-headed as well as warm-hearted will we deliver the Global Goals and deliver for the world’s poorest. 

Penny Mordaunt is the secretary of state for international development and Conservative MP for Portsmouth North