National Human Resource Development as a Holistic Approach for Human Capital Development

The Essay’s Track: Investments in Human Capital: Approaches and Tools

Topic: National Human Resource Development as a Holistic Approach for Human Capital Development

Udaya Mohan Devadas, Ph. D

University of Kelaniya Sri Lanka

udayamohan@kln.ac.lk

Human Capital (HC) has been viewed as a main driver in gaining economic progression as it is regarded with the quality of labour, decided by the knowledge and skills pertained to labour of nations that can be further enhanced and developed. Benefits of HC are that creates wealth to a nation; it increases personal incomes (Mincer, 1958 and Becker, 1960, and Becker, 1964), national productivity (Fabricant, 1959), and national income and economic growth (schultz, 1961, Denison, 1962, and schultz, 1963); it can influence health and demographic factors that promote the economically favorable trends of lower fertility, lower dependency ratios and so forth; it has underpinned a set of economic, political, and social trends such as productivity growth in agriculture, high rates of manufactured exports, sustained and deep declined in human fertility, high rates of domestic saving, and increases in labor productivity that brought the development ‘miracle’ in Japan and Asian Tigers (Baker & Holsinger, 1996).

Brief History  of  HC Theory

The evolution of human capital (HC) theory has been under four major eras: classical economic thoughts of human capital; economic foundational studies of human capital; human capital theory building studies; and contemporary views of HC.

Under classical economic thoughts of human capital, the meaning of the term ‘Human Capital’ (HC) sought to be derived even from the days of the birth of economics. Adam Smith, known as the father of economics, John Stuart Mill, Alfred Marshall and Irving Fisher also addressed the matter of human capital, explaining it as the most valuable of all capitals.

Economic foundational studies of human capital were built by authors such as Jacob Mincer (1958), Soloman Fabricant (1959), Gary Becker (1960), and Theodore Schultz (1961). They formally studied how human, as a capital accumulate wealth. Thus, education and training were identified as wealth accumulators.

HCI as a National Planning Agenda

Under contemporary views,  some countries have been more focused on HC development in their national planning levels under which more focus has been given to develop education. Miyamoto (2003) further points out that some developing countries have taken their own initiatives to increase access and quality of basic education in Indonesia, Singapore, El Salvador, Haiti, and Costa Rica. And countries like Ireland, Korea, Singapore, Malaysia, and Africa have taken some policy initiatives in enhancing upper secondary and tertiary education. According to Miyamoto’s (2003) observation, EU member countries have taken initiatives in the creation of what is called a ‘minimum learning platform’ that each defines the areas of knowledge and competencies needed in the forthcoming labor market.

National HRD (NHRD) as a Broder Approach for HCI  

It is worthwhile studying how the NHRD contributes to the human capital development of countries by understating its meaning and its applications leading to developing a holistic model for National HRD as an innovative contribution from this essay to be integrated to contribute to Human Capital Investment, aiming at economic growth and development.

National HRD Meaning and Its Application

The scope of NHRD extends beyond employment and prepares for employment-related issues to include health, culture, safety, community and a host of other considerations that were not included in human capital investment (HCI) or manpower planning (McLean, 2004).

NHRD has been viewed as important due to many reasons: a single resource that can lead development like in Japan and Korea (McLean, 2004); it establishes an interactive balance among political, economic, social, and educational dimensions to enhance national wealth, health, and well-being (Lynham and Cunningham, 2006); NHRD can resolve burning issues related to the lack of skilled labor as well as the abundance of redundant labor; it is critical for national and local stability, breaking undesired social circumstances, upgrading HR due to technological changes, improving individuals’ quality of life, dealing with ‘coopetition’ (simultaneous need for competition and cooperation), coordination between industries and the government in eliminating problems related to labor scarcity, diminishing the incidence and the impacts of HIV/AIDS on the labor force, increasing productivity, facilitating the achievement of sustainable Development Goals (SDGs), and creating harmony among nations and countries.

A Holistic Model for National HRD to Contribute to HCI of Countries

This model is developed by deeply studying the NHRD theory and country case studies developed so far. Further, this model facilitates observing, interpret, and resolve such human capital issues by identifying their real existence as given in figure 01 below.

Figure-01A a Model of  National HRD for contributing HCI Aiming at Overall Country- Development

Source: Author’s Development

As depicted in Figure 01, the holistic model integrates all levels of HRD operations. It starts with identifying national development expectations and challenges that vary from country to country. This demands a grounded analysis for the development directions of different countries, based on their contextual sensitivities. In order to achieve these national development goals, the development strategies of these countries should be based mainly on people empowerment and development by resolving the issues pertinent to the quantity and quality of the whole population. This is the main outcome of an NHRD of a country. The achievement of NHRD outcomes is the result of the NHRD mechanism of a country that outlines the NHRD vision and strategy, NHRD processes and programs, and NHRD program or process-based outcomes, which are considered immediate outcomes such as educational attainments and workforce development.

The success of an NHRD mechanism is determined mainly by its intervening conditions (meso factors). These immediate intervening conditions include; the extent of resource provided for the national HRD mechanism (resource commitment), available strength of leadership for NHRD (leadership commitment), structural mechanisms provided such as institutional capacity, infrastructure, policies and procedures (structural commitment), quality of management mechanisms and operational excellence extended to planning and implementing an NHRD mechanism (management and operational commitment), quality and nature of utilizing and developing people involved in an NHRD mechanism (people commitment), and the mode of working culture that is created to plan and implement the NHRD mechanism (cultural commitment). The extent of availability of these six commitments stimulates the facilitators or hindrances towards the success or failure of the overall NHRD mechanism. 

Moreover, the need for and the nature of the NHRD is decided primarily by the pressures and imperatives to it, stimulated by the macro conditions of a country. These pressures and imperatives are created by the way a country responds to its international environment; availability of a country’s natural and man-made resources; strengths, and weaknesses of the country’s culture, society and people’s demographic factors; and most importantly, the quality of national leadership, governance, management and operational efficiencies of the country.

The NHRD mechanism should not only consider meso and macro factors but should be strengthened by the country’s mechanisms related to; individual initiatives taken for development; families’ initiatives taken towards family development; organizations’ HRM and HRD processes that utilize and develop people within organizations; countries’ initiatives taken for industry and community development; and the initiatives extended to local and regional development. These areas provide the bases for different performance contexts in a country’s HCI initiatives at varied levels. This model, therefore, provides a holistic guide that can be used to make decisions on, design, implement, and integrate solutions for human capital issues in related fields of studies and institute praxis towards achieving a superordinate goal─ ’national development’. 

References

1. Baker, P.D. and Holsinger, D.B. (1996). Human Capital Formation and School Expansion in Asia; Does a Unique Regional Model Exist? International Journal of Comparative Sociology, 37, 159-173.

1. Baker, W. (1990). Market Networks and Corporate Behaviour. American Journal of Sociology 96(3), 589 - 625. http://jaylee.business.ku. edu/MGMT%20916/PDF/Baker1990AJS.pdf

1. Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference to education. New York: National Bureau of Economic Research.

1. Denison, E.F. (1962). The source of economic growth in the United States and the alternatives before us. New York: Committee for Economic Development.

1. Fabricant, S. (1959). Basic facts on productivity change. New York: National Bureau of Economic Research

1. Lynham, S.A. and Cunningham, P.W. (2006) National Human Resource Development in Transitioning Societies in the Developing World: Concept and Challenges. Advances in Developing Human Resources, 8(1), 116-27.

1. McLean, G. N. (2004). National Human Resource Development: What in the World is it? Advances in Developing Human Resources, 6(3), 269-275.

1. Mincer, J. (1958). Investment in human CapitaLand personal income distribution. The Journal of Political Economy, 66, 281-302.

1. Miyamoto, K. (2003). Human Capital Formation and Foreign Direct Investment in Developing Countries. OECD Development Centre

1. Schultz, T. W. (1961). Investment in human capital [Presidential address delivered at the annual meeting of the American Economic Association, Saint Louis, MO, December, I960]. The American Economic Review, 51, 1-17. Schultz, T. W. (1963). The economic value of education. New York: Columbia University Press.