What
is development?
Generally,
a country’s rate of development is limited by shortage of productive factors.
One scarce factor associated with underdevelopment, which is often singled out,
is capital. There is an assumption that growth hinges on capital accumulation
and that additional capital will either promote or facilitate a more rapid rate
of economic development. It
will however be an oversimplification to regard economic development as a
matter of capital accumulation alone. In the 1950s and 1960s, many third world
nations did realize their economic growth targets but the levels of living of
the masses of people remained for the most part unchanged, - a
signal 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 between 5 to 7 percent or more.
signal 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 between 5 to 7 percent or more.
Real development
Duley
Seers (1969) in Todarro (2000) posed the basic questions about the meaning of
development, when he succinctly asserted “The questions to ask about a
country’s development are…: 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.
Three factors
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 serve as a conceptual basis and practical guideline for
understanding the inner meaning of development. They are, as enunciated by
Goulet (1971) in Todarro (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).
Human capital accumulation
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 accumulating inputs. The acquisition of knowledge and
skills is an investment in the sense that people forego consumption of it in
order to increase future income. Because workers have invested in themselves to
different extents through education, one hour of labour input does not yield
the same 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 can 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)
Impact of human capital investment
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.
Human capital development (HCD) defined
Human
capital development is 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).
Relationship of HCD to education
However,
human capital development can 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 serves as an
input into the production of other goods and services.
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