Role of Human Capital in Economic Development

Though classic and modern economic thinking have significant difference in theory and concept of human capital, they still have the same methodology. They set out with the same goal, in example, trying to explain the secrets of success (and failure) of a nation: why and how a nation managed to reach economic growth and generates prosperity. The methodological basis, either in classic or modern economic thinking, believes that the concept of human capital is only sensible and has a practical implication if understood in the whole framework. For that reason, it is very interesting to see the significance and meaning of the concept of human capital in the global context.

Economic development can be defined generally as involving an improvement in economic welfare, measured using a variety of indices, such as the Human Development Index (HDI). A developing country is described as a nation with a lower standard of living, underdeveloped industrial base, and a low HDI relative to other countries. There are several factors which may have the effect of limiting economic development in such countries. Factors such as these include: primary product dependency, the savings gap and political instability.

Economic Development: Growth is associated with structural, social change and change in the important institutions of the economy.

Africa is a region that has for long been taunted as the dark continent. Years of political cynicism, proliferation of civil wars and governance mismanagement have negated the growth and development of the continent. However if the present positive growth patterns and future economic projections are anything to go by then the continent is set to undergo a massive transformation by 2025. African economies are showing impressive growth, with an average Gross Domestic Product (GDP) growth forecasted to be 6.3 % in 2013, Africa has become the fastest growing region in the world, and only a few Asian countries will continue to grow faster than the continent's top performers. Africa`s growth projections are premised on the backbone of an anticipated educated young population growth, rising intra-African trade, investments in public-private partnerships and commodity-based industrialization. This paper gives an impetus to the future prospects of Africa by highlighting inter alia the present growth trends and envisaged future prospects. It also analyses what still needs to be done to ensure the envisaged growth projections are realized.

Economic growth, put simply, is “an increase in the amount of goods and services produced per head of the population over a period of time”; development is inextricably linked with this economic growth. By utilising theories of economic growth and development we can see how the Chinese and Sub-Saharan African economies have emerged, but, more notably, we can use these to look at patterns from past and present to show their experience and the implications of this growth for the future.

Economic development can be defined generally as involving an improvement in economic welfare, measured using a variety of indices, such as the Human Development Index (HDI). A developing country is described as a nation with a lower standard of living, underdeveloped industrial base, and a low HDI relative to other countries. There are several factors which may have the effect of limiting economic development in such countries. Factors such as these include: primary product dependency, the savings gap and political instability.

In the article by Pillai and Gupta, it looks at human capital and life expectancy. It looks at the perspective on the shaping of the current geo-political structures and the article makes a response about a social development perspective to account for the current positions various nations occupy in the geo-political order of power. The article looks at how others are rising and the article also looks at the individual

income was over three greater than the per capita income of Africa, yet in 1992 it had seen an

Economic Develop is a term that is commonly used to describe the process whereby simple low-income national economies are transformed into modern industrial economies. (Krueger). It includes the policies and practices a country uses, (i.e. environmental issues, educational standards, gross domestic product, (per capita), healthcare levels, infrastructure and the availability of housing), to progress the economic, political, and societal good of its people and generally surmises and describes changes within a country’s economy; in terms of assets, incomes, savings and socioeconomic structure.

The purpose of this paper is to examine the role of investment in human capital in promoting economic growth and

Development is a broad concept that includes social, economic, political and human aspects. Human development consists of the foundation on which the first three aspects .According to Burkey (1993: 38), economic and political development should be translated into social development. As development is a broad concept, it has been extensively explored with a view to realize that economic growth and social development. However, the emphasis moved from industrial and economic development as the factors that determine societal transformations. Economic growth may bring material gain to the people, but development is about enrichment of the lives of the people in the society Edwards (1993:80) this means that development is much more important to a country than economic growth only because when people are not empowered and developed it takes us back to the theory of development which explains that empowerment and

This can be measured by the following formula; Per capita nominal GDP = Nominal GDP / Population, Per capita real GDP = Real GDP / Population. Seven factors determine economic growth. Natural resources such as land, mineral deposits, waterways; climatic conditions provide an essential foundation to economic growth. Combined with the other resources of capital, labor and enterprises, natural resources can be developed and organized to increase the productive capacity if the nation. Consequently the quality and size of the labor force is a major determinant of economic growth. Education and vocational training are essential the growth potential of a nation. The promotion of education and job training schemes increase the knowledge, skills and flexibility of the workforce that contributes to potentially higher levels of productivity and efficiency. Whether from natural increase or immigration population growth can cause a higher level of economic growth. An increasing population requires increased public spending on housing, education and other social needs while businesses expectations of

Improvement of Human Capital can be of three types. All these have their own specific impact on the society. These are:-

Neglecting the role of education in emerging countries is one more commonly made mistake and low Human Development Index pointing out the limited possibilities of human resources has its negative impact on economic as well as on social processes in particular country. How educated residents are, determine the speed of economic growth, while shortage of accumulated human capital makes difficult to implement innovations and lack of adaptation of proven technologies, methods, and practices. The importance of human capital for economic development in general is widely accepted (cf. Bils & Klenow,2000; Krueger & Lindahl, 2001; Prichett, 2001; Romer, 1989). As concerning on education, implies more capable and productive workers, who in turn increase an economy’s output of goods and services. Well-educated human resources also help to make possible the absorption of advanced technologies from developed countries (Barro & Lee, 2001, p. 541). As a consequence, states lacking institutions which promote the demand for education have to give incentives for human capital accumulation. Human capital was the main factor to South Korea’s fast economic development. Investment in education was more than 7% of GDP and 2.8% was private sector’s investment that is the highest rate among OECD countries. But the same policy, investing in education to develop economic, was not as successful in different countries as in South-Korea; consequently the same policies can lead to different results and

inequality in distribution of stock of human capital means underinvestment on the one hand and mal-investment on the other, as total and per capita stocks of human capital figures in women and backward castes indicate. Perhaps, the main reason lies in the failure of human investment revolution in economic thought to really revolutionize common thinking. individuals as well as state policy makers still perceive education expenditure as 'consumption' and as a burden on the state which reduces public savings. it is misleading to treat public expenditures of backward castes and women as 'welfare' but must be treated as 'capital formation'.