THE IMPACT OF HUMAN CAPITAL DEVELOPMENT

 

CHAPTER ONE

INTRODUCTION

1.0  Background to the Study

The acquisition of educational training, improvement in health care delivery and expansion of R&D, constitute human capital development of any nation and it is always critical factors in the economic development of that nation. It is based on this premise; Abiodun (2009) opined that Human resources constitute the ultimate basis for wealth creation that engenders national economic development. According to Kofi(2001), Education though regarded as one of the components of human capital, is a transformational tool on which rest the foundation of freedom and sustainable development. For national economic policies, goals and objectives to be attained, effective, proficient and adept human resource are vital components that cannot be overestimated. This is because human beings constitute a vital part of any nation, thus, acts as building blocks and backbones on which the level of productivity in any economy is determined.

 

 

Human capital development according to Ogunjiuba, (2013) is described as a means of realizing the long-term economic development of a country. This is so because it helps to sharpen the peoples’ potentials by refining their ideological, productive, and educational competences. This implies that the empowerment of the people is imperatives because it can enable them to participate actively in their own development. Human capital development is also a means for enhancing the skills, knowledge, productivity and inventiveness of people through a process of human capital formation (i.e. formal education, training and retraining of the labour force).

It has therefore been globally recognized according to Folloni&Vittadinni, (2010) that Human capital is one major factor that is responsible for economic wellbeing of the people if properly channeled by the economic stakeholders. Ogunjiuba, (2013) added that human capital can be termed as the acquired and useful skills and abilities of a society. The importance of human capital development to economic growth has been seen as strategic to the socio-economic development of nations. These include education, health, Research and development (R&D) etc. The development of human capital is therefore crucial because it ensures that the nations’ human resource endowment is refined -through knowledge acquired from the education sector, skills- through vocational education and entrepreneurship training, productivity- through on the job training and health-through improved health sector for the sole purpose of making optimal utilization of other productive resources that can engender growth and development in Nigeria.

Human capital development is a strategy that centers on human capital resources and not the production of goods and services. It is a people centered strategy because what really matters is empowerment of people to identify their own priorities and to implement programmes and projects of direct benefit to them. This in turn according to Alehile (2009) implies the active participation of people in the development process and the consequent need to construct institutions that permit and indeed encourage that participation. As such, it is necessary that these assets (human) are deployed sensibly for optimum result. An incentive system which is defective can result in a waste of human resources and a higher incidence of poverty as well as greater inequality in the distribution of income. While it is necessary to use existing resources wisely, it is equally significant to add to the existing resources through human capital formation. According to Ogunjuiba (2013), there can be no significant economic growth in any country without adequate human capital development. In the past, Nigeria has unintentionally focused on planning and accumulation of physical capital for rapid growth and development, without recognizing the deterioration of human capital in the developmental process of the nation’s economy.

A critical challenge therefore is how to actually achieve this sustainable economic growth and development. According to the IMF (2002), sustainable development is in three dimensions, they are; economic development, social development and environmental protection. The essence of these pillars according to Oluwatobi and Ogunriola, (2011) is to preserve and enhance the capacity and potential of future generations while meeting the needs of the present generation. To accomplish these multi-dimensional tasks, human capital should be systematically and strategically refined and positioned for the preservation of both the present and the future economic growth processes and development.  Consequently, according to  Lyakurwa (2007), human capital development has the capacity to improve on people’s choices and opportunities, improve healthy living through acquired skills and knowledge and in the long run enhance growth in the nation’s gross domestic product through increased productivity in both the industrial and services sector.

The importance of human capital development on economic growth has been emphasized by the growth theory   popularized by Romer,(1986) and Lucas,(1988).An interesting idea in their work is that in the long run, output per unit could increase even when inputs were exhaustively accounted for technically advanced human capital and a growing knowledge base appear to be part of this wellspring of growth .An implication of Lucas ‘hypothesis on human capital is thus associated with investment in man and his development as creative and productive resources(Harbison,1962).

Nigeria as a Nation is immensely endowed both in natural and human resources. The resources available from one end to the other are immeasurable to the extent that, given a purposeful and dynamic leadership with proper institutions; economic prosperity and output rate would have been doubled even before the 20th century. Hence the primary focus of the current Nigeria government tagged transformation agenda   has been to finding a way to accelerate the growth rate of national income and to engage in structural transformation of her subsistence nature of resource based economy to a production and consumption based economy in order to break the cycle of poverty ,low productivity and economic stagnation.