On the Importance of Human Capital

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Human capital is one of the key drivers of economic success, growth and competitive advantage. It is the measure of economic value that an employee provides through his knowledge, skills and abilities. Human capital Development is based on the belief that an investment in human beings is necessarily and will invariably bring substantial benefits to the organization in the long run. It aims at overall development of human resources in order to contribute to the well being of the employees, organization and the society at large.
Human capital implies the development of one’s abilities and skills to make him or her competent to face the challenges of competition both of present and of the future. It transforms the liability into assets by adopting measures of human capital formation.
Harbison writes the human capital formation indicates “the process of acquiring and increasing the number of persons who have the skills, education and experience which are critical for the economic development of any country. Human capital is thus associated with investment in man and his development as a creative and productive resource”.
If we want to develop our economy we should introduce manpower planning for the development of our human resources. It is the planning of human resources to meet the development needs both of organization and the economy.
One of the most important factors in human capital formation is the development of top skills. Its aim is to impart people with skills, education and all the traits which they need to lead one on the front. Research studies show that all the other resources are dependent on the human capital. If any organization lacks proper investment in human capital, the growth of that organization will led it to halt its development and growth.
Economists like Harbison, Schultz, Kuznets, Kendrick all observed that the success behind the growth of American economy is that they lay due emphasis on their human capital.
Professor Galbraith observed that “we now get the larger part of our industrial growth not from more capital investment but from investment in men and improvements brought about by improved men”.
The reason behind the under developed economies of the world why they are lagging behind and suffering from low economic growth is that they are not properly invested in their human capital. Their human capital lacks the skill and knowledge which are critical for their prosperity and growth. Human capital formation wants to solve the problems which they are facing by imparting necessary skills in man to make them productive resources who contribute towards the achievement of organizational objectives and goals.
In order to remove the backwardness of the underdeveloped countries and to instill capabilities and motivation it is necessary to increase the level of knowledge and skills of their workforce.
The role of education in human capital formation is very much important mostly among the youth. Ordinary people put their view of education as a passive and formal process of accumulated knowledge where one can get a degree or diploma. But education does not only mean getting a degree or diploma but it is a learning process where our personality is formed by motivational abilities, will power to achieve certain goals, entrepreneurial skills, communication skills, dedication, creativity in solving complex problems.
Investing in human capital is extremely important for economic development. It not only includes increased productivity but increased loyalty. It makes associates feel that they are worthy which in turn increases their motivation and they bring success to the organization. These people we are investing in are the real assets. They do not depreciate in value but with each passing day their value increases.
In short, human capital development is an important condition for improving productivity, growth, prosperity which in turn holds the key to economic development.

— The author is a PhD Research scholar . He can be reached at: mubashirkitaba@gmail.com