Investment In People Capital Through Education Toward Development

People are the key wealth of the nations referring to their outputs, capacity and efficiency. From that since people always invest in themselves which can extend their opportunities in all aspects of their lives. Thus, today's nation construction depend on enhance people and organizations of individual activities. In developed countries development means industrialization and that needs skills of labor force. Which could obtain from any kind of education, training to utilize the machines or with the high technologies. Many ways of individual education toward development including the important education, on-job-training, in culture teams, do it yourself development by reading, learning from others taking classes outside the ex - education for example courses in working with others, communication skills or any type of knowledge that add more value to the individual himself.

If the third world people want to be more fruitful, less poverty, and less unemployment, more richer. If they want more opportunities to make their community advanced or raising the life equality. That is providing the demand of investment in human capital. In these documents will give attention to the individuals capital development through education by boost the investment in education and the discussion will be about the training formations, protection under the law, and role to development. Then will define the human capital and how to measure it securities, the demand of investment in human capital and then will demonstrate the ways to purchase it.


Referring to UNESCO the international community agreed that education is right for everyone and it's important, essential toward all the human privileges for example liberty and empowerment. They agree that education give the human the ability to affective involvement in his community, modern culture and depends upon. The proper of education was conceived from the beginning as having a qualitative as well as a quantitative aspect. The time of learn is a whole life time and it cover all activities in human being life since years as a child to older age to obtain the world knowledge quite simply education (knowledge) gets the continuum and coextensive with world and life and that is vital for adopting the requirement of labour and then for mastery of timeframe changing. (UNESCO, 1949) approved that the fundamental education should support the need of each community and to resolve its issues that includes

-basic communication tools for instance reading, writing, and calculation

-employment skills (agriculture, husbandry, commercial skills, building, and some other simple complex that important for economic development

-Domestic abilities (care of unwell and children).

-understanding of individual environment (economical, social, company, low. . . etc).

-the development of features to match man to are in current world

Education have so many formation beginning with family learning skills for their children mix by the essential education which is the formal education which includes primary, extra, post-secondary education, higher education universities and universities, literacy and working out programmes for standard employment or working out programmes for specific jobs or objectives, in-job-training, lessons, and many other kinds from it that any human being can reap the benefits of it to improve his / her skills, knowledge and productivities. Ideal example of the form of education that illustrates the role of education is technical and vocational education (TVE) for live long which is important transition from school to workplace. Actually TVE give schools the role to provide essential qualification for further specific training. Furthermore it could develop the person in his culture aspects for example economical aspect and give him the capability to be accountable for his or her own knowledge. This technique should organize with other educational sector that your biggest challenge that system encountered. This approach motivates the person to utilize his brain and hands for conclusion to economic and industrial development. Furthermore education has a job among the pressure at the job in society. (World Lender, world development report 1998-1999) that "Education is the key to creating, adopting and distributing knowledge". So, always informed person is greater than uneducated one. The contribution of education can be believed by measuring the length of schooling, amount of learning, attendances in schools, and the type of curriculum but could it be important for development? The true important thing is the amount of benefit that contemporary society could obtain from the length or the type of curriculums to choose the appropriate kind of investment in education. It could be investment in schooling or in job training for example TVE education to enhance the productivity of each person. The reliable measure of the return of education was by (Fleisher and Wang, 2004) look at the productivities of education in workplace when they produce effects. That was a production-based go back to education somewhat than any kind of measuring which is widely used. Education makes the person more productive, useful and creative in an economic sense plus more added to the nationwide current economic climate that is mean raising the real human quality. It really is basic objective of development. It is also fundamental for the country of enlarge human being capital to take up modern high technology and essential part toward development. In the third world education can seen as prime device for economic development. It can improve the quality of people by learn them the skills to use the available resources in sufficient way. On the other hand the bigger, modern education the nation obtained the better affect to medical. Also the essential skills of health are gaining from the colleges. Because of this we explore that the bigger spending from individual or government the higher productivity and incomes to the introduction of the nations.

Human capitals

Organization for monetary co-operation and development (OECD) record which was a reply of some Ministers of education define the human capital as the" knowledge, skills, competences and other capabilities embodied in individuals that are highly relevant to economic activity". It can also define as the amount of capability of human to make use of the abilities to productive. Another explanation of human capital is the benefit through economic activity. So the abroad classification is the resources that support the outputs, improvement and job. (Schultz W, 1971. ) Start to see the human being capital when he's free and not an exchangeable advantage can be sold in the market, but it can invest in it in a great many other kinds by teach it, teach it and other types of investment. The term human capitals define by (Todaro, Smith 2009)"The utilization for education, health insurance and other individual capitals that can raise productivities when increased". Moreover, individual capitals are emphasis on indirect capacity to enlarge the electricity by growing incomes.

Benefit could be obtained of real human capital with superior skill to the progress of worker ability to move across establishments occupations, higher earnings for folks and new opportunities in other areas. A lot more skilled people the greater flexible employees, the more in a position to absorb new ideas, adopt foreign technology, improve the local technology, understanding and add knowledge from exterior experience to the neighborhood market. Including the more educated farmer is more efficient in agriculture. He'll promote the technology and trade to these sector. It's regarded that human capital includes the main element role to improve the diverse in productivities. It increased the adaptability and allocates efficiency. So Investment in individuals capital will promote many benefits such as interpersonal cohesion, full work and economic progress, development in all fields.

Indicators of the demand of invest in real human capital through education

The more informed employer a lot more earning earnings in the modern sector opportunity. That's clear when you look at the gap between metropolitan and rural income, as we realize the rural people are less informed than urban one, therefore the salary are less in rural areas. When governments tried to developed this area to be richer, more successful, reduced poverty. They must invest in human capital even as we defined the human being capital as the factor that helped bring the benefit through economical activities. The need for education increased day after day and there is some key indicators show demand from it. First, the numbers of universities enrolment are increased in the majority of countries. (George Psachar- D poulos, 1996) studies on 98 countries show that economic development are associated with college enrolment and that was decided by the (World Loan company, 1993a)when some counties have the same levels in universities enrolment in 1960 such as Pakistan and Korea, but finally in 1980 Korea has GDP higher than Pakistan GDP 3 x with large different rates in primary college enrolment by (Barro, 1991). Second, enhance the quality of education and skills training. This sign is developed every day to meet the need of every demand and lots of researches are done to obtain the latest programmes of training. Finally, increase the number of types of schooling systems. For example technical institutions, commercial schools, industrial academic institutions. . . . etc. The requirements of investment in human being capital on the other palm take two types one is individuals' demands and the other is institutional one. The demand for folks needs many aspects for instance, the needs of higher pay or earnings to secure their lives, the needs of more opportunities for the workplace to choose the proper one for his live, also to secure for himself better live on all aspects for example, health, public, political. . . etc. Furthermore the institutional requirements are concentrate in their targets, so they preferred educated employer to be more productive one. This company could be more acquainted with the new systems, machines and computer systems in recent modern systems than less educated workplace. Indeed that will save time and money for the corporations and by the end of your day that will developed them. All that could be gained from investment on students and employers through education. Because of this (Schultz) proposed that investment in education is the major form of investment in real human capital.

Human capital stock measurement

The impact of human being capital investment is quite substantial. So, before spend money on human being capital the stock of individuals capital should be measured to know the strength and the restriction in which part of human development (education) and then try to expand the investment in this part. That will assist to attain the targets of the countries to build up in each aspect. The literature provides tons of ways of measuring, but in this paper will attempt to focus on the methods that trusted.

Referring to OECD there may be three solutions have been used to assess human capital stocks. These three methods are to bank account the total amount of the knowledge in several ways and how they are allocated with the populace. It's hard to evaluate individual's skills or group's skills to spin them into efficiency, so these measurements give an estimated measure for the activities. The human attribute give the economic its value and cannot easily account it.

First dimension is educational attainment; designed to use the highest degree of education completed by each individual. It uses two kinds of measurement qualification and years and it's popular to measure human capital, but this way make standing of human capital variable from country to other because they have got different standard for every levels, but maybe it's estimated for example the principal level viewed as one level in every countries so anybody complete the primary level in United status have the same person certification in China with principal education completed. Considering that everyone gets the right to inform and to go into the school and other account should taking into account the circulation of gender in education in many countries.

The second way of measuring of human being capital stock is measuring adult skills straight. To make a test for the adult to ascertain if they have certain attribute relevant to financial activities and the key features are

- Interviews with big volume of working-age population in there living place concentrating in details in a few areas such as social-economic position, various educational background and other activities related to human capital formation

-Define amount of domains that related to the abilities that tested.

- The results that obtained when tests each domain name.

-Grouping of the result into levels of performance from 1-5 (1 means failed to performance at bare minimum level)

Similar methodology are produced by OECD which called "life skills" such as resolving problem and the federal government in this approach should determine what skills they need to test or assess which is hard and the interviews are extremely expensive and take long time to have any results.

The third way is mature literacy as known the better adult (worker) who's literate and this person is experienced in two ways

-The percentage of individuals performance at levels of education do not fulfilled their educational level. - Variety in average of people literacy performance with the same attainment.

Other measurements by (Harbison, Myers 1965)

-Levels of educational attainment same as OECD way of measuring. Thus the comparison will be difficult.

-The number of folks with regards to the workforce who are in high level occupation. Which means the number of persons in each group of staff member for example professors, managers, doctors and many other groups, but that not give any sense to the alternative development, nor simulate the qualifications

-Statistical analysis way of measuring for example number of instructors per 10, 000 populations or any other kind of job for occasion engineers, doctors, and dentists per 10, 000 populations. Thais strategy had restriction that excludes the qualification. Another statistical strategy is the enrolment of pupils in each level as percentage to the population.

The consequence of different measurement is not similar and the individuals capital cannot strategy by individuals. Educational attainment dimension is huge range used consequently to the available data. On the other hand immediate skill test was correct measure.

Investment in individuals capital

Development has a lot of aspects for example financial and interpersonal which is important in real human society, therefore the style and the goal of development have different affect on education system. If we view it the way circular would be the contribution of schooling system will be different from country to other to development. As a result Investment in real human capital from the public areas which rely upon the governments. GDP spending on general population education and training is various from country to country. Also spending per college student (per capital) is changing and significant either in schooling or in virtually any designed programme. These programs are one of many ways to purchase human capital by assist work and unemployment to improve the labour market. In fact the type of investment in real human capital differs according to the type of financial activities, available resources, and human contemporary society. So some countries economical predicated on high technology industry, therefore they should established education and training system out of this point of view. The investment will need many kinds it could be through firms or the organisations by coach their labours toward specific needs with their objectives. That will make the labour more beneficial and give them the value to financial. As clear before the human being capital stock is challenging to calculate it unless each company in this situation plan their work development by training and give it an expense. Some European countries countries make a study to calculate the enterprises and companies expenditure on training called "European labour cost study" however the other countries did not. Moving to other kind of invest by people, each family spend considerable amount on their children which challenging to bank account and big part of this is under educational aspect such as buying reports, computers and other educational stuff. So, there is no way to assess accurate number of contribution by individuals to their children to generate skills and knowledge. In addition, providing general public education that related to the orientation target of the communities or countries for example to provide curriculum in universities that associated with the industrial insurance policy.

There are some aspect should take in into consideration when plan for investment in human capital to build up the procedure of investment and enlarge the outcomes from these investment. First, emphasis on quality against variety that is essential for modern land development. Second, emphasis on formal training before work versus on-job-training. Some basic skills should learn in schools while others can be carried out in several ways such as classes, pre employment training, but some types of training can't be done unless in -job-training like equipped power training. Third, focus on individuals needs contrary to the state needs. Furthermore establishing public libraries have many advantages of example to encourage peoples to learn more, find out more; make researches, hence to developed themselves as self education.

Case study

In 1995 China spend 2. 5% of its GDP on investment in schooling and 30%of the same GDP on physical investment on the other hand United Talk about was spending 5. 4% of there GDP in schooling and 17% of the physical investment. So China spending on education (investing on people) from GDP was below other country. Furthermore China investment in physical capital to human being capital each year is higher than almost all of countries. The recent policy in China is to invest more in physical capital than individual capital and to ignore the fundamental role to invest in education. These policies reduce the monetary development in China and promote inequity to the united states. Large amount of studies insure that more educated and skilled people are better to change the financial so that China now type in the world market, therefore the need of informed work force will increased. Thus the investment in physical capital is necessary more informed and trained employee. Capitals and skills are complementary and the imbalanced investment strategy reduce the come back of physical and individuals capital. On the other hand when China over spend money on one type of capital or the other way round it'll lose the opportunities to enhance there wealth. The microeconomic data propose that there is actually significant underinvestment in individual capital in China. When you compare between the productivity in education to the wages that paid in China, it estimated that the labour did not pay there skills what it seem to be worth.


As education is the main element factor to development, so any sort of education will have gain on the individual, but the most crucial thing is to make use of it in proper spot to gain the advantage from it. Individual capital gets the role to raise the mobility and success to development. That could be measured in lots of ways but the most useable the first is the education attainment which predicated on measuring the certification and years. Statistical measurement on the other hand which could calculate reasonable numbers, but without certification means. We are able to summarize the human capital stock could not be measured accrue from each aspect. The indicators of the demand are evident and it is split into institutional and specific demands. Never the less investment in human capital has many encounters to turn up with, each is to same goals which give the person more knowledge, skills to secure his / her live and present the monetary its value. When the government realize the benefit from investment in individuals capital, they'll allocate significant amount of the budget, researches and time to get massive amount its advantage. As they know that better investment in individual capital that will promote values, benefits, development to the societies. Moreover the modern real human capital associated with countries growth, companies increase, and individuals development. That may create sustainability and will maintain the development environment to deliver highest return.

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