importance of human capital in national competitiveness
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Importance of Human Capital in
National Competitiveness
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Introduction
Broadly at the core of national development andcompetitiveness are five sets of factors namely:
1. Human Capital or factors dealing with the humanagents
2. Infrastructure or those dealing with the physical aid toproduction especially energy, transport system, ICT
backbone, water and sanitation3. Economic and governance institutions of society
4. Efficiency of markets: - goods, labour and financial
5. Finance, capital and technology
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Among these the most critical is human capital giventhat it is:
Both an input and output.
All the other factors are the products of human capital
including the development of infrastructure andinstitutions.
The role of human capital becomes clearer whennations are compared in terms of their ability toproduce at lower costs, innovate vis--vis other nationswhich is the essence of national competitiveness.
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Twelve Pillars of Competitiveness
Basic requirements (Key forFactor Driven Economies)
Institutions
Infrastructure
Macroeconomicenvironment
Health and primaryeducation
Innovation and sophistical
factors: key for innovationdriven economies
Business Sophistication
Innovation
Efficiency enhancers: Key forefficiency driven economies:
Higher education andtraining
Good market efficiency
Labour market efficiency Financial Market
development
Technological readiness
Market size
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Human Capital: Nucleus of National
Competitiveness
A nations stock of human capital does notcomprise only
- Literate workforce
- Good percentage of technical, scientific andprofessional categories of labor but also the allimportant categories of:
- Leaders
- Managers- Entrepreneurs
Each of the above plays a different role inassuring national competitiveness.
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Determinants of Quality Human Capital
Education:
Broadly defined to include education in
schools, plus formal and on the job training.
Education plays a key role in the ability of
country to absorb modern technology and to
develop the capacity for self-sustaining
growth and development.
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Health: Health conditions greatly affect the
productivity of the labour force of the country.
Combined with education especially of
females, they constitute major determinants
of the productivity of labour and national
competiveness.
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Culture: Come to think of it, beliefs, norms
and attitudes shape work ethic and
productivity. A body of knowledge points to
the fact that culture matters in the quality and
productivity of human capital. In that regard,
the mode of educationwhether the
emphasis is on rote learning or developmentof thinking capacity, risk taking and innovation
make all the difference.
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National Incentive system: In that connection,
even a single spine wage and salary system is
halfway; an economy gets what it rewards. If
you reward creativity and technical skills,people will respond to them.
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Indias Global Competitiveness
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Human Capital as competitiveness of a
firm
From the national point of view, human
resources are knowledge, skills, creative
abilities, talents and attitudes obtained in the
population; whereas from the viewpoint ofthe individual enterprise, they represent the
total of the inherent abilities, acquired
knowledge and skills as exemplified in thetalents and aptitudes of its employees.
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Significance
Activation of non-human resources
Means for developing competitive advantages
Source of creative energy
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Techniques to enhance human
resource
Career planning and development
it involves identification of individuals and
charting out their career paths and designing
an organisational system of career movement
and growth opportunities for employees.
career development ensures that the
employee is well developed before he moves
up the next ladder in the hierarchy.
T i i d d l t
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Training and development
For attaining technical, human and the conceptual skills.
Methods
On-the-job methods
Job instruction training
Apprenticeship
Coaching/ understudy
Mentoring
Job rotation
Off-the-job methods
Vestibule training
Lectures and conferences
Syndicate
Brainstorming
Simulation training
Sensitivity training
Transactional analysis