Human capital is a broad concept which identifies human characteristics which can be acquired and which increase income. It is commonly taken to include peoples’ knowledge and skills, acquired partly through education, but can also include their strength and vitality, which are dependent on their health and nutrition. Human capital theory focuses on health and education as inputs to economic production. This is in contrast to the concept of human development which views health and education as intrinsically valuable outcomes to be placed alongside economic production as measures of human welfare. In understanding the role of human capital as an input into development it is necessary to consider the possible links between human capital, other forms of capital, income and growth. While it is true for every country, for which there is data, that more educated people earn more than less educated ones it does not follow that there is a simple relationship between investing in people and countries becoming richer. Human and certain forms of physical capital may be complementary. The problem in investing is to match skills with machines. It is not a question of either investing in people or investing in machines, both are necessary. Even more important is the issue of how much to invest in alternative forms of capital equipment and skilled labour. The answer to that question is unlikely to be the same for all countries or to remain unchanged over time.
Human Capital and Economic Development Simon Appleton and Francis Teal
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African Development Bank
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The African Development Bank is the
premier financial development institution
of Africa, dedicated to combating poverty
and improving the lives of people of the
continent and engaged in the task of
mobilizing resources towards the economic
and social progress of its Regional Member
Countries.The Bank’s s mission is to
promote economic and social development
through loans, equity investments, and
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whose shareholders include 53 African
countries and 24 non-African countries
from the Americas, Asia, and Europe. It
was established in 1964, with its
headquarters in Abidjan, Côte d’Ivoire,
and officially began operations in 1967.
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