Topic > Human Capital Development - 1783

Human capital representing "the knowledge, skills, competences and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being" (OECD) was defined and first measured by Sir William Petty (1690). He believed that labor was the "father of wealth" and included national wealth when measuring. After Petty, Adam Smith (1776) presented a clear analysis of human capital and mentioned it as part of general assets. Subsequently, Shultz (1961) classified human capital formation as skills and knowledge acquired by people, and recognized human capital as one of the key elements for national economic growth. Today, the United Nations presents the Human Development Index as a set of life expectancies. , index of education and income to classify countries into four levels of human development. Looking at World Bank data it is obvious to see that people in countries with higher human development receive a higher income than those in countries with lower human development. UNESCO statistics also show that the country with the highest literacy rate is the country with the highest income rate. Castello (2002) showed that the Gini coefficient changes slightly within countries over time, even if reducing educational inequality improves the standard of living of the population at the lower end of the income distribution. They found two plausible explanations: (1) improving the wages of people with a lower level of education may also cause an increase in the wages of people with a higher level of education; (2) the return to education increases with the level of education. According to Laroche's eight main aspects of human capital, investments in human capital are not qualitatively homogeneous. Denison (1967) argued that…the central part of the paper…is government policy. A positive role of government can bring further benefits to its citizens and the nation. For example, embracing globalization can converge growth and effectively increase both private and social returns; Improving government administration can reduce corruption and other public sector problems; building infrastructure can raise living standards. These actions would finally increase the country's per capita output. In conclusion, human capital is certainly one of the key factors that can influence the wealth of countries. But it is not the only reason for the country's poverty and inequality between countries. There is so much work to be done in studying human capital and economic growth in the future. Just as Lindahl (2009) said: “We know something about the former but very little about the latter.”