1. What Is Human Capital And Why Is It So Crucial To Expand Human Capital As Part Of The Development Process In Developing Countries?

What Is Human Capital

    Human capital is used to refer to amount of skills, the knowledge and the level of expertise that a person possesses. It is the training attained training at the job and education. Human capital is the skill and knowledge of human beings.

   Developing countries such as Nigeria, policy makers admit that human capital is ideal in supplementing the set polices and investments in order to boost the production sector and enhance economic progress. Around the globe, the developing countries are investing in human capital so as to add on their social abilities, health, programming skills and ideals. The main aim of the investments is to boost productivity. The success of these countries depends solely on the human capabilities available. Countries such as Kenya, Rwanda and Panama have improved their Labour market by use of skills attained through human capitalization. Human capitalization does not only have impact on career aspect but also in social cohesion. People with minimal foundation skills are likely to fail to participate in any community involvements while those with high skills may feel that they have influence and may strive to try and make difference in both social and political life (Cruz, et al 2014).

    Developing countries have not realized a greater positive development impact from their higher education programs. Most of the people who have acquired the high levels of formal educations in these developing countries are finally unemployed or end up in some filthy jobs that do not fully utilize their acquired skills and this may force them to leave their countries and emigrate to other countries. This results in misallocation of resources and wastage that cost these countries a big deal. Developing countries such as Vietnam is among the highest countries producing the biggest number of engineers worldwide but the pay and working conditions there are not so favorable. Most of these engineers leave their country waggling in poverty and go to find better working conditions. The development of a solid elementary education system should take precedence over an expansion of the university system in developing countries such as Pakistan so as to focus more keenly on the links and relationship between venturing in development of skills, employment and productivity.

   Health economists have asserted that an educated population will most likely go for lifestyles that are healthy. People with high education will are less likely to involve themselves with unhealthy behaviours such as alcohol abuse, smoking and will involve themselves in frequent health checks. This shows that a better educated population will be healthier. In reverse, a healthy population will be better educated. This is because students with improved routines may be more efficient in acquiring knowledge and this helps them perform better in education. People who keenly observe what they consume in future than current consumptions will stay in school for long, work more at younger ages and do investments in a better health-related behaviours (Machlup et al, 2014).

    An increase in human capital can lead to an increase in GDP. When human diversity is due to heterogeneous ability, the GDP of a country can increase if the manufactured intermediary goods are satisfactorily replaceable and firms have a big extent of control. The GDP of a country can be reduced by increase in human capital if the range of human capital is due to income inequality.


Cruz, Marcio, and Zacharias Ziegelhöfer. Beyond the income effect: impacts of conditional cash    transfer programs on private investments in human capital. The World Bank, 2014.  

Machlup, Fritz. Knowledge: Its creation, distribution and economic significance, Volume III:

The economics of information and human capital. Vol. 781. Princeton University Press,2014.

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