Human capital, risk and the World Bank’s reintermediation in global development

Benjamin M Hunter,Jonathan D Shaffer

doi:10.1080/01436597.2021.1953980

Benjamin M Hunter, Jonathan D Shaffer

Open Access

https://doi.org/10.1080/01436597.2021.1953980

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Abstract

This article examines an attempt to reconstitute global development governance in a context of growing influence for private finance. We focus on the World Bank’s Human Capital Project (HCP) and Human Capital Index (HCI), which have stated aims of promoting economic growth and accelerating progress towards achievement of the Sustainable Development Goals. Informed by a review of publicly available World Bank materials, we argue that, through its HCP and HCI, the World Bank is responding to its own institutional sidelining in development financing and governance with a strategy of reintermediation. Its leaders have pursued a system of governance in which the World Bank creates and instrumentalises knowledge on human capital – an asset to be accumulated through judicious investments in markets for self-betterment. Through its HCI the World Bank has expanded its global benchmarking practices, encompassing new domains and quantified predictions of future productivity, in the hope of shaping domestic policy processes. Its leaders propose to use HCI scores to signal risk to investors and political leaders, triggering political shocks that will spur policy reform. Crucially, these efforts seek to reassert the World Bank’s epistemic authority and financing clout as the influence of its own lending wanes. Supplemental data for this article is available online at https://doi.org/10.1080/01436597.2021.1953980 .

Highlights

Global development governance is undergoing important institutional shifts as we progress further into the era of the Sustainable Development Goals (SDG) (Horner and Hulme 2019)
We focus on one component of the World Bank’s contemporary development apparatus that appears to respond to this dilemma: its Human Capital Project (HCP)
Documents indicate attempts to incorporate Human Capital Index (HCI) scores into rankings and ratings produced by other organisations, which would allow the World Bank to leverage the financial resources of those organisations to exert pressure on countries to adopt reforms, at the time of writing these attempts appear to have been largely unsuccessful

Summary

Introduction

Global development governance is undergoing important institutional shifts as we progress further into the era of the Sustainable Development Goals (SDG) (Horner and Hulme 2019). Documents indicate attempts to incorporate HCI scores into rankings and ratings produced by other organisations, which would allow the World Bank to leverage the financial resources of those organisations to exert pressure on countries to adopt reforms, at the time of writing these attempts appear to have been largely unsuccessful In his Council on Foreign Relations speech, Kim suggested HCI scores might drive reform if they are incorporated into annual Article IV consultations between the International Monetary Fund and governments (Council on Foreign Relations 2018). Risk management is a key current running through the lifecycle of the HCP, from benchmark to policy intervention This reflects a social risk approach that is prominent in the Bank’s poverty and social protection programming (Best 2013), but which in the HCP has been become part of a wider framework for governance that spans multiple scales of activity and combines individualised investments in human capital, associated judgements of risk, and the mediating capacities of the World Bank

Conclusion

Findings

Background