| Abstract: | Higher education institutions play great roles for the economic development in supplying
trained human capital so as to feed the employment demand, especially in labor intensive
economy of developing countries. Adam Smith, father of modern economy, defined
human capital as follows: “Of the acquired and useful abilities of all the inhabitants or
members of the society. The acquisition of such talents, by the maintenance of the
acquirer during his education, study, or apprenticeship, always costs a real expense,
which is a capital fixed and realized, as it were, in his person. Those talents, as they
make a part of his fortune, so do the likewise that of the society to which he belongs. The
improved dexterity of a workman may be considered in the same light as a machine or
instrument of trade which facilitates and abridges labor, and which, though it costs a
certain expense, repays that expense with a profit.” The definition of “human capital”
recognizes that people in organizations and businesses are important and essential assets
who contribute for development and growth, in a similar way of physical assets such as
machines and money. The collective attitudes, skills and abilities of people contribute to
organizational performance and productivity. Any expenditure in training, development,
health and support is an investment, not just an expense. The basic structure of R. Solow
economic growth model explains that human capital, along with the physical capital, is a
factor of production, and human resources are both the instrument and goal of economic
development. According to Luis, David and Robert (2003), development which refers to
learning opportunities should not be limited to improving employees’ performance on the
current job, but focus on the long run to help employees preparation for future work
demands,(Benardin, 2003, p. 164). According to history of unemployment put by the
classical economists, in traditional societies, salaried jobs did not exist as money was not
in use. These cultures lived off the land directly, and the land belonged to the tribe or to
no one. Everyone knew how to build shelter and make food. When these cultures invented
currency and moved to the cities, they began to depend on money to buy food from a
middle man, instead of growing, gathering, or hunting the food directly from nature.
Dependence on jobs to make money to buy food and shelter was the beginning of
unemployment, too. Population growth has a two edge relationship with the economic
growth. Large population both stimulate and hinder growth depending on the country’s
capacity to allocate its population properly as a skilled labor force or not. Thus, human
resources are both instrumental and goal of economic development, especially for
developing states whose economy is more labor intensive than others. |
