Meaning Of Human Capital Development In Economics

Economics

Topic: Human Capital Development

Table Of Contents

  • Definition Of Human Capital Development
  • Types Of Human Capital
  • Definition Of Human Capital
  • Definition Of Human Resources Development
  • Factors Affecting The Efficiency Of Human Capital
  • Distinction Between Human Capital And Physical Capital
  • Characteristics Of Human Capital
  • Economic Importance Of Human Capital

What Is Human Capital Development

This is a way of fulfilling the potential of the people by enlarging their capabilities. This implies empowerment of people through enhancing their skills for the workplace, knowledge, productivity and inventiveness, as to enable them participate actively in their development.

However, this in turns implies the active participation of people in the development process and the consequent need to construct institution that permit and encourage that participation. Human capital is an important factor for the wealth of a nation due to it’s influence on their overall production of the country. Technological progress can provide more efficient production methods like machines and computer but skilled labour is necessary to manage and develop them as well as to improve the quality and productivity of the existing labour. The formation of Nigeria human capital is therefore of great importance if the country wants to be competitive in the future especially with it’s ambitions of being among the developed economics in the world.

Definition Of Human Capital

What Is Human Capital?

Human capital is the stock of competencies, knowledge and personality attributes embodied in the ability to perform labour value to satisfy human wants.

Definition Of Human Resources Development

What Is Human Resources Development?

Human resources development is the integrated use of training organisation and careers development efforts to improve individual, group and organisation effectiveness.

Types Of Human Capital

Human capital can be of two types, which are:

1. Specific Human Capital: This refers to knowledge or skills that is useful only to a single employer, firm or industry. Where human capital is specific, it becomes risky since firm closure or industry decline lead to skills that can not be transferred.

2. General Human Capital: This refers to knowledge useful to all employers E.g Literacy. Human capital development is measured using the Human Development Index (HDI). This provides measures of Human Capital Development (HCD) in 3 dimensions >> Income, health and education. The HDI ranks Nigeria as the 15th out of 187 countries with a value of 00.459. This places the country in the bottom, meaning that Nigeria is considered to have low level of human capital development.

Factors Affecting The Efficiency Of Human Capital

1. Education: This is the acquisition of formal education up to a higher level especially to tertiary level to build capable human resources that will contribute to sustainable structural transformation of the economy.

2. Training: Workers learn and are trained outside schools especially on the job. Some graduate may need to pass through skill acquisition centres to acquire practical training before getting gainful employment.

3. Medical Care: Good medical care is a vital investment that can increase the productivity of human capital.

4. Moral Attitude: Good moral upbringing and good conscience will make one conduct himself rightly and work conscientiously leading to increase efficiency and productivity.

Distinction Between Human Capital And Physical Capital

Human Capital

1. Human capital is the labour require directly to the production of goods E.g An engineer in car production.

2. It refers to something which cannot be touched in any form like his (Engineer) expertise, wisdom and knowledge.

While In Physical Capital

1. Consists of all the means of production that goes towards producing goods and services.

2. The production of physical capital goes towards satisfying the need and requires of human being otherwise known as capital.

Characteristics Of Human Capital

1. Substitutable: It can be substituted but not transferred like Land, Labour Or Physical.

2. Intangible Asset: It is not owned by the firm/industry that employs it. It reports to work in the morning and leaves at close of the day in the evening.

3. Cumulative Growth: It grows cumulatively over a long period of time.

4. Transportable & Shareable: Competence, especially knowledge can be moved and shared. This transfer does not prevent it’s use by the original holder.

Economic Importance Of Human Capital Development

1. Increase In Welfare Of HouseHold: This is increase in the people’s well being, their health, happiness, safety, prosperity and fortunes at level of education, skill acquisition and enlightenment have increased.

2. Decline In The Incidence Of Poverty: Human capital development makes it easier for one to be gainfully employed and a worker to br better filled into his job thereby reducing incidence of poverty in the economy.

2. Political Stability: It will raise the level of efficiency of political, social and religious leaders and enable the ruled to understand better the policies and programmes of the leaders.

4. A Key Element Of Growth: It improves the employability of the labour force and skilled labour is necessary to manage and develop more efficient production methods leading to economic growth.

5. Sustainable Structural Transformation Of Economy: Human capital development brings about the establishment and institutionalization of modernity that will contribute to sustainable structural transformation of the economy.