Introduction of the human capital

The introduction of the concept of human capital related with the economic science
development. Economists wanted highlight and draw attention to the ability of other
workers who worked with machines, designed the new machines which helped them at
hard physical work. It is about these skills that are specific to every person for individual
develop. We need increase our knowledge, abilities, and skills for progress of the human
society. The problem is that there is no single definition of human capital or a single
view of the scientific understanding of its nature, status, and role. In the research, we
want to confirm the hypothesis that there are at least two different scientific approaches
to understanding the nature and importance of human capital.

Difinition of human capital

Human Capital is a measure of the skills, education, capacity and attributes of labour which
influence their productive capacity and earning potential.

According to the OECD, human capital is defined as:

“the knowledge, skills, competencies and other attributes embodied in individuals or groups
of individuals acquired during their life and used to produce goods, services or ideas in market
circumstances”.

Factors that determine human capital

1_Skills and qualifications

2_Education levels

3_Work experience

4_Social skills – communication

5_Intelligence

6_Emotional intelligence

7_Judgement

8_ersonality – hard working, harmonious in an office

9_Habits and personality traits

10_Creativity. Ability to innovate new working practices/products.

11_Fame and brand image of an individual. e.g. celebrities paid to endorse a product.
 12_Geography – Social peer pressure of local environment can affect expectations and
attitudes.

effects of human capital on economic growth

-Human capital affects economic growth and can help to develop an economy by expanding the
knowledge and skills of its people.

-The level of economic growth driven by consumer spending and business investment determine
the amount of skilled labor needed.

-Investing in workers has had a track record of creating better employment conditions in
economies throughout the world.

Importance of human capital

1_Structural unemployment
2_Quality of employment
3_Economic growth and productivity
4_Human capital flight
5_Limited raw materials
6_Sustainability
Reference
1_Human Capital: Population Economics in the Middle East,Ismail Abdel-Hamid
Sirageldin,American Univ in Cairo Press, 2002.
2_Studies in Human Capital,
Jacob Mincer,Edward Elgar Publishing, 1993.
3_Human Capital and Economic Growth in India, Indonesia, and Japan,ysis,Bas van Leeuwen,Box
Press shop, 2007