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Prospects of Human Capital in the Future: Background

Written by: OECD Development Centre

Article Overview: Future prospects of human capital development can be seen from the current trends in education among the children as well as the training efforts made in enterprises.

Prospects of Human Capital in the Future: Background

Future prospects of human capital development can be seen from the current
trends in education among the children as well as the training efforts made in
enterprises. Table II.7 shows net primary school enrolment ratios, among primary schoolaged
children in developing countries. It indicates that primary school enrolment in
developing countries, on average, is well behind that of developed countries. This
appears to be due to a few developing regions that show extremely poor performance,
such as Central Asia and SSA. On the other hand, both the LAC and EAP regions show
an impressive performance that is comparable to the developed countries. This regional
disparity poses a big challenge to the less performing developing regions with a high
number of undereducated children lowering the average level of human capital among
the working-age population.

To see how developing countries are doing to foster a higher skilled workforce,
Table II.8 examines entry rates in post-basic schooling (i.e. upper-secondary and
tertiary) for selected developing countries. Similar to the trends found in educational
attainment in basic schooling (Table II.6), Table II.8 indicates that both the LAC and SEAsia
regions have high average enrolment rates of 74 and 67 per cent (upper-secondary)
and 31 and 25 per cent (tertiary), respectively. Intraregional disparities in entry rates
remain large, with low-performing countries such as Paraguay and Indonesia lagging
behind high-performing countries such as Argentina and Malaysia.

While numerous sources of cross-country data on formal education exist, crosscountry
evidence on vocational training within the enterprises is rather limited9. A rare
example is the World Bank’s World Business Environment Survey, which covers vast
regions of the world including OECD countries, Latin America, and East Asia. The survey
shows that approximately 60 per cent of firms in both the East Asian and Latin American
regions conducted some formal training in the year 2000 (Batra and Tan, 2002; Batra,
2003). There are, however, large intraregional disparities in training. In the East Asian
region, large training incidences exist between high training countries such as Singapore
(76 per cent), Philippines (76 per cent), China (65 per cent) and low training countries
such as Indonesia (46 per cent) and Malaysia (29 per cent).

Summary
To sum up, trends show that educational attainment among the adult population
has steadily increased over the past three decades. However, cross-regional and intraregional
disparities remain a disturbing issue with the African region consistently lagging
behind other developing regions. Future prospects of educational attainment among the
adult population are bright for countries in some areas of the developing world including LAC
and SE-Asia. However, the present state of school participation in the African region shows
limited prospects for future growth in human capital. Evidence on enterprise training is fairly
consistent with these trends in formal education with large cross-country disparities.

OECD DEVELOPMENT CENTRE
Working Paper No. 211
HUMAN CAPITAL FORMATION
AND FOREIGN DIRECT INVESTMENT
IN DEVELOPING COUNTRIES
by
Koji Miyamoto

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Article Tags: age population, american regions, central asia, current trends in education, east asia, educational attainment, environment survey, formal education, future prospects, impressive performance, latin american, oecd countries, rare example, regional disparity, regions of the world, school enrolment, seasia, skilled workforce, trends in education, vocational training



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