INTRODUCTION - BACKGROUND TO THE STUDY
The
general rate of development in any country is always limited by the shortage of
productive factor. One scarce factor associated with underdevelopment, which is
often singled out in programming for development is capital. There is an
assumption that growth hinges on capital accumulation and that additional
capital will either promote or facilitate a more rapid of economic development.
It will however be an oversimplification to regard economic development as a
matter of capital accumulation alone.
The
experience of the 1950s and 1960s, when many third world nations did realize
their economic growth targets by the levels of living of the masses of people
remained for the most part unchanged; signalled that something was amiss with
just defining development in terms of the capacity of a national economy to
generate and sustain an annual increase in its Gross National Product (GNP) at
the rate of perhaps 5 percent to 7 percent or more.
Duley
Seers (1969) in Todarro (2000) posed the basic question about the meaning of
development succinctly when he asserted “The questions to ask about a country’s
development are therefore: what has been happening to poverty? What has been
happening to unemployment? What has been happening to inequality?” If all three
of these have declined from high levels, then beyond doubt this has been a
period of development for the country concerned. If one or two of these central
problems have been growing worse, especially if all three have, it would be
strange to call the result “development” even if per capita income doubled.
Yet
it goes without doubt that the great attention given to the ways to accelerate
the growth rate of national incomes is not unfounded. All people have certain
basic needs without which life would be impossible. These life-sustaining basic
human needs include; food, shelter, health and protection. Three core values
have been identified as representing common goals sought by all individuals and
societies, and these serve as a conceptual basis and practical guideline for
understanding the inner meaning of development. They are as enunciated by
Goulet (1971) in Todaro (2000), Sustenance, self-esteem and freedom. Sustenance
indicates the ability to meet basic needs (food, shelter, health and
protection). It follows therefore, that essential to the definition of
development is this aspect, which incorporates the means of satisfying man’s
basic needs. Economic growth by way of definition is the steady process by which
the productive capacity of the economy is increased over time to bring about
rising levels of national output and income.
Three
factors or components of economic growth are of prime importance in any
society: firstly, capital accumulation, including all near investments in land,
physical equipment and human resources; secondly, Growth in population and
hence eventual growth in the labour-force; and thirdly, technological progress
(Todarro, 2000).
Capital
accumulation results when some proportion of present income is saved and
invested in order to augment future output and income. Investing in human
capital is one way of accumulation inputs. The acquisition of knowledge and
skills is an investment in the sense that people forego consumption for it in order
to increase future income. Because workers have invested in themselves to
different extent through education, one hour of labour input does not yield the
output across all workers. Education increases future labour productivity and
future income and can thus be seen as an investment in human capital, which
then is embodied in the human being. This idea an already be found in Adam
Smith (1776) “A man educated at the expense of much labour and time to any of
those employments which require extraordinary dexterity and skills, may be
compared to an expensive machine. The work which he learns to perform, it must
be expected, over and above the usual wages of common labour, will replace to
him the whole expense of education, with at lease the ordinary profits of an
equally valuable capital. Also, Alfred Marshall (1890) stated that “the most
valuable of all capital is that invested in human beings” (Ludger, 2000).
It
has been confirmed that no country has achieved sustained economic development
without substantial investment in human capital. Several studies have evolved
to analyse the channels through which human capital can affect growth (Surveys
include Barro and Salai-Martin, 1995; and Temple, 1999). Much of this
literature had emphasized the complementary relationship between human and
physical capital, noting how imbalances in these two stocks, as well as human
capital externalities, can affect growth in the economy. The scientists and
technicians, appear to have a comparative advantage in understanding and
adopting new or existing ideas into production.
Definition, human capital
development was described as an end or objective of development. It is a way to
fulfil the potential of people by enlarging their capabilities and this
necessarily implies empowerment of people, enabling them to participate
actively in their own development. Human capital development is also a means
since it enhances the skills, knowledge productivity and inventiveness of
people through a process of human capital formation broadly conceived. Thus,
human capital development is a people centered strategy and not goods centred
or production centered strategy of development. What really matters is the
empowerment of people to identify their own priorities and to implement
programmes and projects of direct benefit to them. This in turn implies the
active participation of people in the development process and the consequent
need to construct institutions that permit and indeed encourage that
participation (Ogujiuba and Adeniyi, 2003). However Human capital development
can also be seen as the accumulation of past investment in education. Education
is an economic good because it is not easily obtainable and thus needs to be
apportioned. Economists regard education as both consumer and capital goods
because it offers utility to a consumer and also services as an input into the
production of other goods and services.