strides towards improving education and health outcomes over the past two decades. On average in EMDEs, secondary school completion rates have increased by 7 percentage points between 1998-2002 and 2013-17. At 27 percent, this is about two-thirds of the advanced-economy average. Tertiary completion rates have risen by about one-half to 10 percent in 2013-17, but still about half of the advanced-economy average. Life expectancy has risen by 4 years to 71 years, about 10 years short of the advanced-economy average.

These substantial improvements in human capital mitigated adverse developments weighing on EMDE potential growth between 1998-2002 and 2013-17, and helped raise potential growth in regions where progress was particularly large. The largest improvements between 1998-2002 and 2013-17 were made in SSA, where secondary completion rates almost doubled (by 7 percentage points) to approach the advancedeconomy average, and life expectancy rose by 7 years to almost 60 years. Life expectancy also rose considerably (4 years) in South Asia to 72 years.

# 3.2. Physical capital accumulation

Investment can lift potential output growth through direct and indirect channels. Directly, investment is the source of capital accumulation, which raises labor productivity and potential output—provided investment is not channeled into excess capacity and wasted (Devarajan, Swaroop, and Zhou 1996; Presbitero 2016). Indirectly, investment can raise total factor productivity because technological improvements are often embodied in investment (Solow 1962).

Global investment growth halved between 2010 and 2016, with the investment weakness shifting from advanced economies to EMDEs over this period. Investment growth in advanced economies declined during the Euro Area crisis and, after a brief rebound, again after the oil price decline that disrupted energy sector investment in the United States. In EMDEs, investment growth slowed sharply following the global financial crisis, from double-digit rates in the immediate wake of the crisis to a post-crisis low of 3 percent in 2016 (Islamaj et al. 2019). Despite signs of bottoming out in 2017, investment growth has been well below its pre-crisis average as well as its longer-term average in more than half of EMDEs in the sample (Figure 6). In EMDEs, both public and private investment were weak. Public investment accounted for about 31 percent of total investment in EMDEs and about 15 percent of advanced-economy investment during 2010-15 (World Bank 2017a). After 2011, public investment growth remained anemic following the stimulusrelated surge of 2008-09 and private investment growth slowed sharply after 2011.

Whereas investment weakness in advanced economies mainly reflected sluggish demand and output growth, in EMDEs a broader range of factors has been at play. In commodity importers, slowing FDI inflows and spillovers from soft activity in major advanced economies accounted for much of the slowdown in investment growth after 2011. In commodity exporters, a sharp deterioration in their terms of trade (particularly for energy exporters), slowing growth in China, and mounting private debt burdens accounted for much of the slowdown in investment growth. In several EMDEs, political and policy uncertainty was a key factor in investment contractions or slowdowns (Kose et al. 2017). Investment weakness may also reflect the declining price of capital goods or a growing 7