0.6 Investment in human capital: education and health  (Page 4/16)

Hou Sua tuition is zero. It enables the orphans and abandoned children to earn a living and have a future. During its first few years school has trained and placed more than 3,000 professionals employed throughout the country.

The author carried away from this experience two main conclusions:

1. It reinforced my conviction that the most important investments a society can ever make is in Human Capital formation in very young people. This belief also happens is deeply rooted in many cultures:
   
   In Vietnam , every primary school by 2007 featured a big red banner across the front saying:

   "Plant a fruit tree and a farmer will benefit for 20 years. Build a school and society will benefit for fifty years."

   - Attributed to Ho Chi Min, in his letter to U.S. Secretary of State Jimmy Byrnes in 1945
   
   This attitude is also found in other Asian nations and as we shall see 14th century Scotland. One of the best known sayings in Korean translates thusly:

   "One step forward in education is ten steps forward for society."

2. The Hoa Sua School, and others like it in other poor countries, supports the view that the most effective form of foreign aid , by far, is that of investment in Human Capital formation; Indeed as we will see later in this book (Chapter___), other than disaster relief, this may be the one of the few kinds of foreign aid that really assists.

Innovative approaches to human k formation: education and health

The Progresa program begun in Mexico in 1995. This is another example of resourceful efforts to reduce poverty and at the same time enhance Human Capital. Mexico’s efforts to reduce immizeration, especially in rural areas were mostly ineffective before 1995. The tools to fight poverty before then were expensive, poorly administered subsidies on food and milk. Owing to information limitation government was unable to administer a means test. This meant that middle and upper income people got sizeable benefits, reducing that available for the poor.

In 1995, the Finance Ministry tried a “radical” new departure— “Give them the money.” This was long the standard University of Chicago prescription for helping the poor. Rather than create a new agency of bureaucrats to help, just give the money to the poor .

Families were awarded cash to:

1. Keep children in school.
2. Commit to regular medical checkups for children and mothers.

This is yet another program recognizing the inextricable links between income growth, health, nutrition, education and lifetime earnings.

Did it work? After thirteen years of experience an article in Science magazine said yes .

“Skills, education, and the rise of earnings inequality among the “other 99 percent”, Science, May 23, 2014, 344(6186): 843-851.