Country Insights: Human Resource Potential

The Human Resource Potential factor measures the extent to which the country's economy is able to make use of its human resources. It assesses levels of education, employment, labour force participation, and labour market rigidity. In our most recent update of the Country Insights model for the fourth quarter of 2023 (here), Ireland emerges as a nation with significant potential in this regard. In contrast, Iraq falls behind in this category.

Source: Continuum Economics

Ireland demonstrates a strong performance in the Human Resource Potential factor, evidenced by various indicators. Notably, it boasts a lower proportion of young adults not engaged in education, employment, or training compared to the OECD average, reflecting effective youth engagement strategies. Furthermore, Irish students consistently outperform their OECD counterparts in mathematics, reading, and science assessments, underscoring the quality of the education system. Despite the slightly elevated risk of job automation for some workers, Ireland's proactive approach to higher education is evident, with a significant share of young adults attaining tertiary degrees, surpassing the OECD average. Moreover, the country’s strong proficiency in digital skills, demonstrated by its ranking fifth in the Digital Economy and Society Index 2022, coupled with notable growth in recent years, positions it favourably in the global digital landscape. These factors collectively highlight Ireland's robust human resource potential, positioning it as a nation well-equipped to meet evolving economic demands and challenges.

Iraq's low score in the Human Resource Potential factor is attributed to various factors contributing to a significant human capital crisis. Despite early investments in health and education, Iraqi children are projected to achieve only 41% of their potential productivity upon reaching adulthood, well below the MENA region's average of 57% as per the World Bank (here). This is exacerbated by low education attainment rates, with Iraqi children expected to complete only 6.9 years of schooling compared to the MENA average of 11.3 years. Moreover, inequalities persist, driven by location and socioeconomic status, leading to disparities in access to education, particularly in rural areas. Additionally, gender disparities impede women's access to post-graduate and university education, contributing to lower female labour force participation rates and hindering overall human capital development in Iraq.