The famous quote of Jean Bodinprovide us with an important visualization about the human capital in developing countries, in order to achieve the millennium development goals.
However, these goals remain challenge that must be realized despite in this epidemiological crisis which created an economic and social threat around the world, it destroyed the pillars of human development such as: education, health and income, so the Index of Human Development has declined to 1,8%.
In fact, the Covid 19 pandemic has put developing countries in a state of emergency to confront this disaster, by strengthening the intangible resources of which human capital is a part.
This article aims to demonstrate the importance of human capital in development process relying on the experience of National Initiative for Human Development, as a pioneer reference that place people at the center of public policies.
The human capital: from conception to process
The concept of human capital is not newly. Yet, it was previously introduced by Adam Smithin his theory. The latter believes «human capital includes the set of skills and abilities that individuals acquired through family education, study and learning. This acquisition result in real expenses that correspond to fixed and integrated capital in the individual which capital is self part of his fortune as the society to which he belongs”.
Furthermore, Adam Smith’s theory was extensively reformulated by economist Gary Beckerin 1964, in his book entitled ‘’Human Capital’’, Becker placed humans at the center of economics and emphasized the important role of investment in human capital, he worked to show that human capital corresponds to all the productive capacities that an individual can acquire through the accumulation of general or specific knowledge and another forms of skills.
The idea raised by Becker reflects the thought of the Greek philosopher Aristotle’s who said : “any one can discover his talents and develop his potential, in the face of the danger of neglecting his humanity and that happiness comes through the realization of the potential of each one ”
These theories devoted to human capital have been developed over the past decades by many international researches and studies as World Bank and The Organisation for Economic Co-operation and Development reports.
According to the World Bank report, Human capital consists of the knowledge, skills, and health that people accumulate throughout their lives, allowing them to realize their potential as productive members of society.
The report point’s out three main components of human capital index as “survival, education, and health”. This indicator was recently created by the World Bank Group as part of the “ Human Capital Project”, so countries can use it as measure productivity for future generation based on what it would be like if this generation benefits from optimal education and health conditions.
In addition, HCI contains three main criteria: the infant mortality rate (rate of survival to age 5), the quality of education (number of school years and quality of education) and health (developmental delay in children and survival rates to adulthood). Otherwise, the combination of these criteria gives a value between 0 and 1, if the index approaches to 1, the country offers good education and health to its citizens, so thus its new generation become more productive, and if the HCI is 0.6, it means that the economic productivity of the younger generation will be 60% of what it could have achieved under optimal education and health conditions, so the country will lose 40% of the economic potential of this generation.
Therefore, without human capital, a nation cannot maintain sustainable economic growth, prepare its workforce for skilled jobs of future the possibility of competition in the globalized economy. Thus, this capital was considered as an interlunar factor of the country’s wealth. Knowing that total wealth consists mainly of intangible capital, add into to produced capital and natural capital.
Consequently, it appears that these human, natural and produced capitals constitute the basic elements of intangible capital. This capital resides in the interaction that takes place between the different types of assets, by adding the tangible assets “ produced capital ”, which are the result of human activity, financial assets, buildings, infrastructure, urban equipment and land, as well as natural assets“natural capital”, such as fossil fuels, minerals, agricultural land, cultivated land, pastures, forests, protected areas, materials raw materials, farmland, forests and protected areas, and human capital.
Moreover, in 1986 the concept of intangible capital appeared by the French specialist in niche markets “ Bruno Bizalion ”, this economist pointed out that the company’s capital also include intangible factors, and then he developed a method which evaluate this intangible potential.
Five years later, the Swedish organization theorist “Leif Edvinsson” used this term in his study of evolution of group management practices. This research was contacted in collaboration with American writer ‘Michæl Malone’, and published in 1997 when they learned about the company hidden wealth, either we say everything you use to create value which one cannot necessarily discover by reading its balance sheet (not all the values of the synergies of the organization are shown). Therefore, intangible capital is related to definition the difference between the real value of the market or the firm and book value.
For the World Bank, the concept of intangible capital is differs from its previous theories. it indicates that the wealth and geopolitical strength of a nation can be built not only with natural resources and built wealth, but also with its capacity for innovation, level of education of its citizens and social cohesion that reigns there.
In its report entitled “Where is the wealth of nations” the World Bank devised a new method of evaluating the wealth of nations, called intangible capital. This capital consists the sum of human capital (all the skills and knowledge available in a country), social capital (the ability of individuals to work together to achieve set goals) and institutional capital (the quality of legal, educational and health systems in place in a country).
As a result, human capital remains an essential element in this process of wealth accumulation and progress which determines earning capacity, and brooding employment horizons of individuals to evaluate the level of income and distribution in the community. Knowthat the development of human capital is not limited to the economic dimensions only, but take in consideration political, social and cultural elements.
The promotion of human capital: A development approach
The promotion of human capital has been a decisive importance in public policies for many developing countries, so there is no strategy or program initiated by the State, local authorities or private sector that mention it.
In this regard, since 1960, Morocco has developed various strategies and programs that fall within the framework of national programs to universal school education and fight illiteracy; social development strategy (SDS) in 1993 to improve social indicators such as education, health and priority equipment; drinking water supply program for the benefits of the rural populations (PAGER) in 1995; social priorities program (BAJ1 ) in 1996 focused on basic education, especially for girls, health care, and employment promotion; rural electrification program (PERG) in 1996; rural development (1997); special decentralized development program (2001).
Nevertheless, these programs and strategies did not succeeded in evolution the level of social indicators in various areas of development. Therefore, the country’s index of human development ranges in position 126.
To remedy this situation, the public authorities have proposed a new approach to struggle poverty and social exclusion in collaboration with the United Nations Development Program.
This approach give significant increase in the gains on consolidation of democracy in the area of freedom (protection of human rights, public freedoms, justice and gender equality) illustrated by social projects such as the educational reform with education as the second priority after territorial integrity, the entry into force of the Compulsory Health Insurance (AMO) and the measures taken to maintain the continuity of the main pension schemes, the social housing programs have mobilized additional resources, in particularly extra-budgetary, from outside the budget which witnessed new renewed mobilization of all actors involved in the unemployment problem, the national program to support the creation of a business by adapting training to the changing needs of the national productive system and managing the labor market.
In 2005, these realizations has supported with an innovative strategy named National Initiative for Human Development. This initiative aims to change the social work in the country by opening up a new horizon and an exceptional coherence centred on the development of human capacities.
For 15 years ago, this social project has permitted the realization of countless projects and actions of rising future generations as enhancing health and education services, improving income and economic inclusion of youth people, promoting entrepreneurship & employment, and supporting social & solidarity economy.
In this context, the National Initiative for Human Development has established an arsenal process at the national and territorial level in order to achieve these projects for benefits of society and citizens, to involve panoply of actors present in each territory to participate in the program process, through creation the local, provincial and regional committees which bring together the various stakeholders (local population, associations, regional authorities, experts, and representatives of ministerial departments …). These actors have contributed to implementing within framework of these programs and have taking into consideration issue of citizens’ standard of living at the local level.
These aforementioned mechanisms have been straightened approve of integrated approach to enhance human capital, to develop new structures named “youth platforms”, this space considered as forums for interaction between various programs adopted by different stakeholders in the public and private sectors which work for economic inclusion of youth people and rural women by listening, directing them to support and develop their personal skills so that they can bring their ideas and turn them into real projects that constitute sources of local intangible wealth.
In general, this participatory approach demonstrates the importance of human capital as source of wealth creation if it is properly valued.
So, the promotion of human capital has appeared essential in the recent epidemiological crisis, For that reason, the Moroccan development model must be based on expansion of capacities & freedoms as well as working to stimulate human possibilities & potentialities, taking into account the social and cultural heritage, customs, governance, new information and communication technologies.
To invest in human capital, it is important to promote a systematic foundation for long-term plan that respect the specifics of issues related to education and health, based on the following facts:
– Consolidation of citizenship and human rights (make it possible to release the capacities and potentials of citizens so that they can fully contribute to the achievement of development).
– The importance role of the civil society and its synergy in development process (because development cannot be envisaged without involving civil society).
– Awareness of proximity factor, made on the intangible resource of each territory in order to give an identity or an image for each “city”, each “village” and each “douar”, as taking into the national context in which we operate.
Eventually, the promotion of human capital is not just a goal that must be achieved but rather development approach conditioned on participation and inclusion of human being in this process as an actor regardless of his gender and age.
- Jean Bodin was a French jurist and political philosopher (1529 -1596).
- Adam Smith, is a Scottish econimist and philosopher (1723-1790).
- Adam Smith, The Wealth of Nations, 1776.
- Daanoune Rachid and El arfaoui Marouane, ‘’ the concept of intangible capital: the ambiguity of a terminology, Journal of Academic Finance, Vol 9- N ° 1, Spring 2018.
- Gary Stanley Becker was an American economist who received the 1992 Nobel Memorial Prize in Economic Sciences.
- G. S. Becker, Human Capital, A Theoretical and Empirical Analysis, Columbia University Press for the National Bureau of Economic Research, New York, 1964.
- Leif Edvinson et Michæl Malone, Intellectual Capital : Realizing Your Company’s True Value by Finding Its Hidden Brainpower, Collins 1997.
- Michael Shawn Malone, Publisher, investor, businessman, author of numerous books on business and high technology such as “The Virtual Corporation”.
- Michel Vernières “the notion of human development” in institutions and development seminar, December 2004, p 2.
- Rapport mondial sur le développement humain, PNUD 2005.
- Resche, Catherine, 2007. «Human Capital : l’avers et le revers d’un texte métaphorique.», LSP and Professional Communication, 7-2 , 23-4.
- Sen Amartya,‘’ a new economic model: development, justice, freedom ’, 2nd edition, Odile Jacob, 2003, p 15.
- Stéphanie Fraisse-D’olimpio, ’the foundations of human capital theory’, SES-ENS, 2009.
- Stiglitz Joseph, Towards a new development paradigm, political economy, 5, 2000, p.5-3
- World Bank. 2005. Where is the Wealth of Nations? Measuring Capital for the 21st Century. https://openknowledge.worldbank.org/handle/10986/7505