Fadia M. Saadah: In Azerbaijan, human capital investments key to resilient growth in COVID-19 era

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By limiting access to health, education, social protection and employment, the COVID-19 pandemic threatens to reverse human capital gains in Azerbaijan. In a recently published report, Survive, Learn, Thrive: Strategic Human Capital Investments to Accelerate Azerbaijan’s Growth, the Government of Azerbaijan and the World Bank identify the main challenges in building and activating human capital and highlight the high impact interventions that respond to constraints, Modern diplomacy writing. Fadia M. Saadah, World Bank Regional Director of Human Development for Europe and Central Asia, looks back on the successes and challenges of the past, as well as the opportunities for the World Bank Group to join forces to the government of Azerbaijan to ensure resilient growth fueled by human capital investments.

– What do you think are the main challenges facing the formation and activation of human capital in Azerbaijan?

-The government of Azerbaijan has achieved a lot in terms of human capital development. Over the past five years, enrollment in higher education has increased by 21%. The introduction of compulsory health insurance has promoted an increase in the utilization of the level of essential primary care and improvements in efficiency. Contributory pensions and poverty-targeted social transfers have dramatically increased the incomes of the poorest 40 percent, facilitating household-level investments in health and education.

Despite this progress, gaps in human capital investment persist. On standardized tests, students from well-off families score the equivalent of three years of schooling above students from poor families, indicating large inequalities in learning outcomes. Out-of-pocket payments remain high, despite the launch of compulsory health insurance, reducing access to the services needed to control the increase in noncommunicable diseases. Only one in five households in the poorest quintile benefits from the targeted social assistance program, and labor market participation remains low, especially among women.

Azerbaijan’s human capital index is 0.58, which means that a child born today in Azerbaijan would be 58% as productive as he could have been in adulthood if she had been in good health and had received a full education. The COVID-19 pandemic has reduced access to social services and is expected to cause an economic contraction of 4.2% in 2020. The government has taken up the challenge of recovering health and learning gains and ensuring that the development of human capital remains central. on the political agenda.

-Azerbaijan faces the dual challenge of recovering from the COVID-19 pandemic and strengthening health, education, learning and employment services to facilitate growth. What strategic investments do you recommend for the human development sector in the short and medium term?

-The government aims to balance the medium and long-term goal of reforming social systems with the ongoing response to the COVID-19 pandemic. Thus, in the health sector, we recommend the digitization and interoperability of health information systems to support comprehensive surveillance and facilitate continuity of care in the treatment of noncommunicable diseases. Reforming health financing to increase public health spending and protect households from direct spending will be important in increasing access to health care.

As schools reopen, Azerbaijan is investing in correcting learning losses. This may involve making sure schools follow health protocols to reduce their risk of becoming the source of group infections, providing students with financial and non-financial incentives not to drop out of school, and equipping schools. and train teachers to better manage in-person and distance learning. We also recommend the creation of a fund to support innovation in higher education.

Social assistance will be essential to ensure that the most vulnerable households can access social services.

Improving the coverage of the targeted social assistance program and increasing public funding for these transfers will further improve household resilience to consumption shocks. Including employers in the design and implementation of active labor market programs will help connect people to jobs.

The potential of investments in human capital to boost growth and resilience in Azerbaijan is significant. A World Bank analysis, The Changing Wealth of Nations 2018, reports that human capital accounts for 64% of global wealth. If Azerbaijan provided comprehensive education and health care for children and adults, its long-term gross domestic product per capita could be 1.67 times higher than it is today.

-The World Bank has partnered with Azerbaijan for historic reforms since independence. How do you see the commitment evolving in the coming years?

-The next phase of the dialogue on human capital policy in Azerbaijan can benefit from a focus on putting this agenda into practice through investments in human capital. The World Bank Group remains committed to providing technical and financial support to operationalize and implement this ambitious strategy. We highlight below important areas of engagement in education, health, social protection and employment.

Education: The World Bank Group has long supported the government in the development of the education system, including general education reforms and the formulation of the country’s education sector development strategy. The government introduced per capita funding in higher education and a system of remuneration and quality assurance in secondary education.

The second education sector development project, closed in 2016, focused on improving the quality of teaching and learning in general education. Through ongoing policy dialogue, the World Bank Group will continue to support education reforms, in particular to increase access to early childhood education and stimulate innovation in higher education.

Health: The World Bank Group has engaged in the health sector in recent years through policy dialogue and the provision of technical expertise to support health financing reforms. At the request of the government, it facilitates the exchange of knowledge that can inform the implementation of compulsory health insurance, drawing on the experiences of Kazakhstan, the Republic of Korea and Costa Rica.

With funding from the Japan Policy and Human Resources Development Fund, the World Bank Group is supporting efforts to improve digital data governance and leverage claims data to strengthen provider payment mechanisms within the system. ‘compulsory health insurance. Over the next few years, the World Bank Group will continue to engage in policy dialogue on priority issues, including medicare, e-health and telemedicine, and the development of an integrated complaints management system.

Social protection and work: In recent years, the World Bank Group has supported the government’s efforts to lift Azerbaijan’s most vulnerable people out of poverty, by investing in the implementation of the National Employment Strategy and crucial welfare and disability reforms.

A recently approved employment support project aims to improve access of vulnerable people to employment by improving the scope and effectiveness of the government’s self-employment program, improving employment services and programs and building the capacity of the public sector. The Internally Displaced People’s Living Conditions and Livelihoods and Supplementary Funding Project, which ended in 2019, has helped improve living conditions and increase people’s economic self-sufficiency. internally displaced. The World Bank Group will continue to support Azerbaijan through continuous political dialogue to strengthen the social protection system as a platform to improve human capital outcomes and household resilience to shocks.


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