© 2018 by Robert Person.  The views expressed on this website are my own and do not represent the official policy of the U.S. Army, Department of Defense, or U.S. Government.

Mar 26

The Human Capital Gap

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Many developing countries feel that the way to grow and expand their economies lies in investing in infrastructure and material development. They often focus on this at the expense of investing in their human capital. Human capital is the sum of the nation's health, skills, and knowledge/experience. Developing and investing in human capital is such things as building schools, hospitals, and creating apprenticeship programs. The author of this article makes the claim that since the creation of the Doing Business Report by the World Bank, thousands of new reforms have been created as countries could no longer ignore their problems when staring at the data. The Doing Business Report looks at everything from tax policy to contract enforcement; however, the report does not look at human capital factors. If a similar index was created relating to human capital, a similar galvanizing effect is likely to occur. Investing in human capital is critical to the continued growth and development of economies.

 

By investing in education, one massively increases the annual income of the student for the rest of their life, with more money in hand more money is spent and invested which further spurs the countries economy. With that economic growth their is more tax revenue generated, with more tax revenue generated there is more money for continued investment. Investing in human capital also increases trust in the government which increases the governments position, so everyone benefits.

 

Foreign Affairs

https://www.foreignaffairs.com/articles/2018-06-14/human-capital-gap

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