Subnational investments in human capital

The issue

Investing in people’s wellbeing and boosting their economic potential will equip present and future generations to progress, realise their aspirations and prosper. To invest in people effectively we must look beyond national-level aggregates to relative poverty within countries and beyond income-only measures of poverty and inequality. Poverty, and what deprivation means for people’s lives, can vary significantly from one part of the country to another. Identifying and understanding these inequalities so that international and domestic resources can be targeted effectively to subnational regions in greatest need is critical.

Our work

Our expertise in data has enabled us to produce cutting-edge evidence on how resources are allocated in relation to need when we look at poverty levels subnationally. We joined forces with the Overseas Development Institute (ODI) to research how official development assistance and domestic resources are allocated to the poorest and most vulnerable people with a focus on key sectors of health and education. The analysis was published in our report Subnational investment in human capital and follow-up research on specifically health and education outcomes was reported in Failing to reach the poorest: Subnational financing inequalities and health and education outcomes.

Our impact

Immediately following our research, we held two roundtables with key stakeholders to discuss our findings and their implications for how governments and donors need to improve targeting of investments. The first was held with ODI and co-hosted by the Organisation for Economic Co-operation and Development (OECD) in Washington DC. The second roundtable was held with the UN Foundation and Save the Children Fund in New York. These events enabled important discussions on the findings from this work and what that should mean for future development finance policy amongst a diverse range of actors including foundations, think tanks and official actors such as the Chair of the OECD’s Development Assistance Committee.

Our engagement on this crucial issue so far has seen it taken up and shared by key actors and influencers as a critical contribution to the evidence base for current investment in human capital. It supports efforts to influence the work of the World Bank’s International Development Association to ensure that the right investments are being made for the poorest and most vulnerable people. Our work also forged and strengthened relationships with actors from important new initiatives at the World Bank, such as the Human Capital Project, to discuss the effects of poor subnational targeting on national progress and how understanding this link could be key to improving spending to drive better outcomes overall.