FEM 4204 HUMAN CAPITAL DEVELOPMENT: OVERVIEW OF CONCEPTS

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FEM 4204FEM 4204HUMAN CAPITAL DEVELOPMENT: HUMAN CAPITAL DEVELOPMENT:

OVERVIEW OF CONCEPTSOVERVIEW OF CONCEPTS

ZURONI MD JUSOHZURONI MD JUSOHRESOURCE MANAGEMENT AND CONSUMER RESOURCE MANAGEMENT AND CONSUMER

STUDIES, FACULTY OF HUMAN ECOLOGYSTUDIES, FACULTY OF HUMAN ECOLOGY

PERSONALPERSONAL

• ROOM:ROOM:– Block A (A2-16)Block A (A2-16)

• EMAILEMAIL– [email protected]@putra.upm.edu

.my.my

• PHONEPHONE– 03-89467111 (O)03-89467111 (O)

• CONSULTATIONCONSULTATION– MONDAY (2-4)MONDAY (2-4)

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COURSE CONTENTCOURSE CONTENT

• REFER COURSE OUTLINEREFER COURSE OUTLINE

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EVALUATIONEVALUATION

• COURSEWORK COURSEWORK 60% 60%– ASSIGNMENT ASSIGNMENT

30%30%– TEST TEST

30%30%• FINAL EXAMS FINAL EXAMS

40%40%• TOTAL TOTAL

100% 100%

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ASSIGNMENTASSIGNMENT• ASSIGNMENT 1 & 2 (10%)ASSIGNMENT 1 & 2 (10%)

– Based on journal article and article given.Based on journal article and article given.• Human capital n income distribution in Malaysia Human capital n income distribution in Malaysia

(Rahmah & Ishak)(Rahmah & Ishak)• Brain DrainBrain Drain

– Give your own comments, recommendation & Give your own comments, recommendation & Suggestion.Suggestion.

– Submission – 12/10/12 & 14/12/12Submission – 12/10/12 & 14/12/12

• ASSIGNMENT 3 (20%)ASSIGNMENT 3 (20%)– Case studyCase study– Submission – 14/12/12Submission – 14/12/12

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TEST & FINAL EXAMSTEST & FINAL EXAMS

TEST (30%)TEST (30%)• TYPES OF TYPES OF

QUESTIONS:QUESTIONS:– True/FalseTrue/False– Multiple choiceMultiple choice– StructuresStructures

• TOPICS COVER:TOPICS COVER:– Topic 1, 2 , 3 & 4Topic 1, 2 , 3 & 4

• DATE:DATE:– 19 – 21 /OKT/201219 – 21 /OKT/2012

FINAL (40%)FINAL (40%)• TYPES OF TYPES OF

QUESTIONS:QUESTIONS:– True/FalseTrue/False– Multiple choiceMultiple choice– StructuresStructures

• TOPICS COVER:TOPICS COVER:– AllAll

• DATE:DATE:– Academic/upmetAcademic/upmet

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OBECTIVESOBECTIVES

• To understand the focus of economic To understand the focus of economic developmentdevelopment

• To understand various relevant To understand various relevant concepts related to human concepts related to human development and human capital development and human capital development/investmentdevelopment/investment

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REFERENCESREFERENCES

• Human Development Report, UNDP Human Development Report, UNDP http://hdr.undp.org/hd

• Human Development Report 1990, UNDP Human Development Report 1990, UNDP http://hdr.undp.org/reports/global/1990

• Anand, S. and Sen, A. K (199) Anand, S. and Sen, A. K (199) Human Human Development Index: Methodology and Development Index: Methodology and MeasurementMeasurement, Human Development Report , Human Development Report OfficeOffice

• Nickols, S. Y (1985) Thinking Globally Acting Nickols, S. Y (1985) Thinking Globally Acting Locally: The Balancing Act, Locally: The Balancing Act, Proceeding of a Proceeding of a workshop sponsored by the Family Econs workshop sponsored by the Family Econs section of AHEAsection of AHEA

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REFERENCESREFERENCES

• Rahmah Ismail (1996) Modal Manusia Rahmah Ismail (1996) Modal Manusia dan Perolehan Buruh, dan Perolehan Buruh, Dewan Bahasa Dewan Bahasa & Pustaka& Pustaka

• Begg, D., Fischer, S., and Dornbusch, Begg, D., Fischer, S., and Dornbusch, R. (1987) R. (1987) EconomicsEconomics, McGraw Hill, McGraw Hill

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OUTLINEOUTLINE

• What “development” means?What “development” means?• The Wealth of a NationThe Wealth of a Nation• Definition, Concepts of Measurement Definition, Concepts of Measurement

ofof– Human DevelopmentHuman Development– Human Capital (Investment)Human Capital (Investment)– Human Resource DevelopmentHuman Resource Development

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What “DEVELOPMENT” What “DEVELOPMENT” means?means?

• DefinitionDefinition::– ““Development is a totality. It is an Development is a totality. It is an

integrated cultural process comprehending integrated cultural process comprehending values such as the natural environment, values such as the natural environment, social relations, education, production, social relations, education, production, consumption and wellbeing. Development consumption and wellbeing. Development is endogenous, it can only come from within is endogenous, it can only come from within a society, which defines in total a society, which defines in total sovereignty, its vision and its strategy, and sovereignty, its vision and its strategy, and counts first and foremost on its internal counts first and foremost on its internal strengths and cooperating with societies strengths and cooperating with societies that share its problems and aspiration”that share its problems and aspiration”

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What “DEVELOPMENT” means?What “DEVELOPMENT” means? …cont…cont

• From the definitionFrom the definition::– Not necessarily referring to material development Not necessarily referring to material development

(e.g. consumption and production)(e.g. consumption and production)– Inclusive of human aspects (e.g. social relations, Inclusive of human aspects (e.g. social relations,

educations, sovereignty) that leads to human educations, sovereignty) that leads to human wellbeingwellbeing

– Take into account conservation of environment Take into account conservation of environment • Note:Note:

– Not all development that aims at bringing about Not all development that aims at bringing about changes or advancement can be carried out by changes or advancement can be carried out by individuals or communities ~ e.g. poverty individuals or communities ~ e.g. poverty eradication planeradication plan

– Thus, the role of govt comes in ~ called Thus, the role of govt comes in ~ called “sponsored development” “sponsored development”

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What “DEVELOPMENT” means?What “DEVELOPMENT” means? …cont…cont

• Perspectives on DevelopmentPerspectives on Development– Economic developmentEconomic development– Social developmentSocial development– Political developmentPolitical development– Human developmentHuman development– Sustainable developmentSustainable development

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Economic “DEVELOPMENT”Economic “DEVELOPMENT”

• When?When?– Occurs when the economy of the nation Occurs when the economy of the nation

grows; activities in various sectors such grows; activities in various sectors such as manufacturing, services, commerce as manufacturing, services, commerce and agriculture and agriculture

• The indicators:The indicators:– GNP, GDP, per capita incomeGNP, GDP, per capita income

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Economic Economic “DEVELOPMENT” “DEVELOPMENT” ......contcont

• Granovsky (1985)Granovsky (1985)– ““Process for improving the social and Process for improving the social and

economic conditions of a population economic conditions of a population group”group”

– Thus, countries are grouped according Thus, countries are grouped according to their level of “development, based to their level of “development, based on economic indicators”on economic indicators”• GNP, GDP, per capita incomeGNP, GDP, per capita income

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Economic “DEVELOPMENT”Economic “DEVELOPMENT”

• Gross Domestic ProductGross Domestic Product– The market value of all final gds and svc produced The market value of all final gds and svc produced WITHINWITHIN

a country in a given period of timea country in a given period of time– GDP = C + I + G + (Exports – Imports)GDP = C + I + G + (Exports – Imports)

• Gross National ProductGross National Product– Basic measures of society’s economic performanceBasic measures of society’s economic performance– Total market value of all final goods and services produced Total market value of all final goods and services produced

in the economy in one yearin the economy in one year• Per capita incomePer capita income

– GNP measures the size of total output, thus, it may conceal GNP measures the size of total output, thus, it may conceal the std of living of individual household in the economy – the std of living of individual household in the economy – e.g. GNP is rising significantly but the population is growing e.g. GNP is rising significantly but the population is growing rapidly, so per capita std of living may be constant or even rapidly, so per capita std of living may be constant or even declining declining

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• Effect of development on people an on Effect of development on people an on environment ~ may be both (+) and (-)environment ~ may be both (+) and (-)

• GNP and environmentGNP and environment– The undesirable “gross national by-products” – The undesirable “gross national by-products” –

e.g. dirty air and water and other forms of e.g. dirty air and water and other forms of environmental pollutionsenvironmental pollutions

• Check this website:Check this website:– Gross domestic happiness – Gross domestic happiness –

http://www.yaleeconomicreview.com/issues/summer2006/gdh.php

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• Group discussion:Group discussion:– Find out:Find out:

1.1. What are the criticisms of using GNP and GDP What are the criticisms of using GNP and GDP as an indicator of standard of living?as an indicator of standard of living?

2.2. GNP and GDP of various countries:GNP and GDP of various countries:1.1. Developed nationsDeveloped nations

2.2. Developing nationsDeveloping nations

3.3. Find out about their HD strategies and status. Find out about their HD strategies and status. What is/are the relationship between HD and What is/are the relationship between HD and GDP/GNP? GDP/GNP?

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Social “DEVELOPMENT”Social “DEVELOPMENT”

• Definitions:Definitions:– Encompasses a commitment to Encompasses a commitment to

individual wellbeing and volunteerism, individual wellbeing and volunteerism, and the opportunity for citizens to and the opportunity for citizens to determine their own needs and to determine their own needs and to influence decision which affect them. influence decision which affect them. Social development incorporates public Social development incorporates public concerns in developing social policyconcerns in developing social policy

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• UN social development covers 4 UN social development covers 4 main areas:main areas:

1.1. Poverty eradication and employmentPoverty eradication and employment

2.2. Intergovernmental support service and Intergovernmental support service and implementationsimplementations

3.3. Socio-economic policy and Socio-economic policy and development mgtdevelopment mgt

4.4. Social integrationSocial integration

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• The ultimate objective:The ultimate objective:– To bring about sustained improvement in the To bring about sustained improvement in the

well-being of the individual, family, community well-being of the individual, family, community and society at largeand society at large

• The Indicators of social progress:The Indicators of social progress:– Reduction or eradication of mass poverty, Reduction or eradication of mass poverty,

inequality and conditions of underdevelopmentinequality and conditions of underdevelopment

• The dimension of social development:The dimension of social development:– Social welfare; health; education; housing; Social welfare; health; education; housing;

urban and rural development; and land reformurban and rural development; and land reform

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In short:In short:• The concept:The concept:

– “ “investments and services provided by the govt investments and services provided by the govt that benefit populations in various areas ~ rural that benefit populations in various areas ~ rural areas , urban areas, district, and the country as a areas , urban areas, district, and the country as a whole with the aim of improving level of living of whole with the aim of improving level of living of the masses”the masses”

• An attempt to develop the citizen or An attempt to develop the citizen or community community

• Normally linked to the provision of public Normally linked to the provision of public facilities or social infrastructurefacilities or social infrastructure– E.g. electricity, roads etc.E.g. electricity, roads etc.

• Dependent upon economic growthDependent upon economic growth

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Human “DEVELOPMENT”Human “DEVELOPMENT”

• Human is the “Human is the “actoractor” in the development ” in the development process and the beneficiaries of development.process and the beneficiaries of development.– Thus, without human (individual or community) Thus, without human (individual or community)

involvement, it’s difficult to achieve the goal of involvement, it’s difficult to achieve the goal of developmentdevelopment

• Definition:Definition:– ““Development that started from the internal self of Development that started from the internal self of

an individual or community, arose from the an individual or community, arose from the awareness of the “actors” to move forward and bring awareness of the “actors” to move forward and bring about changes in their lives”about changes in their lives”• Being aware and having the proper intention should go hand Being aware and having the proper intention should go hand

in hand becausein hand because• Thus, human development = attitude developmentThus, human development = attitude development

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Human “DEVELOPMENT” …Human “DEVELOPMENT” …contcont

• Attitude development does not Attitude development does not happen automatically. But, it happen automatically. But, it requires self confidence, effort and requires self confidence, effort and independence, cooperationindependence, cooperation among among ourselves to achieve such ourselves to achieve such advancementadvancement

• Things that won’t help”Things that won’t help”– Selfish, intolerance Selfish, intolerance

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THE WEALTH OF A NATIONTHE WEALTH OF A NATION

• What is the What is the main focus of main focus of economic economic development?development?

• Income vs. peopleIncome vs. people

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THE WEALTH OF A NATION THE WEALTH OF A NATION ……contcont

• How income obscure the primary How income obscure the primary aim?aim?

1.1.National Income figures do not reveal the National Income figures do not reveal the composition of income or real beneficiariescomposition of income or real beneficiaries

2.2.Achievements that do not show up or not Achievements that do not show up or not occur immediately in higher measured occur immediately in higher measured income or growth figuresincome or growth figures

E.g better nutrition and health services, E.g better nutrition and health services, greater access to knowledgegreater access to knowledge

In other words ~In other words ~ Income is not the sum total Income is not the sum total of human lifeof human life

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• Relevant quotes:Relevant quotes:1.1. ““Wealth is evidently not the good we are Wealth is evidently not the good we are

seeking, for it merely useful and for the seeking, for it merely useful and for the sake of something else” sake of something else” ((Aristotle ~ Philosopher)Aristotle ~ Philosopher)

2.2. ““The difference between a good political The difference between a good political arrangement and a bad one” (in terms of its arrangement and a bad one” (in terms of its success and failures in facilitating people’s success and failures in facilitating people’s ability to lead “flourishing lives” ability to lead “flourishing lives” (Aristotle ~ (Aristotle ~ Philosopher)Philosopher)

3.3. ““So act as to treat humanity, whether in So act as to treat humanity, whether in their own person or in that of any other, in their own person or in that of any other, in evry case as an end withal, never as means evry case as an end withal, never as means only” only” (Emmanual Kant ~ Philosopher)(Emmanual Kant ~ Philosopher)

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DeWalt (1985) on DevelopmentDeWalt (1985) on Development1.1. Must assure that basic human needs are metMust assure that basic human needs are met

2.2. Should have goal of ecological balanceShould have goal of ecological balance

3.3. Should avoid concentration and centralizationShould avoid concentration and centralization

4.4. Must attempt to reduce human avarice for Must attempt to reduce human avarice for competition over resources to lessen the competition over resources to lessen the chances of conflict and warchances of conflict and war

5.5. Must adopt social justice as a goalMust adopt social justice as a goal

6.6. Must operate with mankind-centered goalMust operate with mankind-centered goal

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DEFINITIONS, CONCEPTS AND DEFINITIONS, CONCEPTS AND MEASUREMENTSMEASUREMENTS

Important concepts:Important concepts:– Human DevelopmentHuman Development– Human Resource DevelopmentHuman Resource Development– Human Capital DevelopmentHuman Capital Development– Human Capital InvestmentHuman Capital Investment

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Human Development Human Development

• The meaning:The meaning:– ““A process of enlarging people’s A process of enlarging people’s

choices” (UNDP, 1990) and enhancing choices” (UNDP, 1990) and enhancing their capabilities in leading their livestheir capabilities in leading their lives• To lead a long and healthy lifeTo lead a long and healthy life• To acquire knowledgeTo acquire knowledge• To have access to resources for a decent To have access to resources for a decent

std of livingstd of living

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Human Development Human Development …cont…cont

• The term Human Development:The term Human Development:– Imply that the main concern is the Imply that the main concern is the distributiondistribution of of

wealth not with its wealth not with its creationscreations– Denotes both the Denotes both the processprocess of widening people’s of widening people’s

choices and the choices and the levellevel of their achieved well beingof their achieved well being– It helps to distinguish between two sides of human It helps to distinguish between two sides of human

development ~ to avoid human frustrationdevelopment ~ to avoid human frustration• The The formation of human capabilitiesformation of human capabilities (e.g. improved (e.g. improved

health, knowledge and skill)health, knowledge and skill)• The The use people make of their acquired capabilitiesuse people make of their acquired capabilities for for

work or leisurework or leisure

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The measurement (HD indicators):The measurement (HD indicators):1.1. Longevity ~ Life expectancyLongevity ~ Life expectancy

• Why? Long life is valuable in itself and Why? Long life is valuable in itself and various benefit linked to longer life various benefit linked to longer life (adequate nutrition, good health etc)(adequate nutrition, good health etc)

2.2. Knowledge ~ Adult literacyKnowledge ~ Adult literacy• Why? Reflection of access to education Why? Reflection of access to education

necessary for productive life in modern necessary for productive life in modern societysociety

3.3. Command over resources for decent Command over resources for decent living ~ the purchasing powerliving ~ the purchasing power

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• Human DevelopmentHuman Development– The core is enhancing The core is enhancing

human capabilities to human capabilities to function, and the function, and the achievement of people achievement of people (in terms of long life or (in terms of long life or literacy) are valued as literacy) are valued as end in themselvesend in themselves

– Income is only a Income is only a means to achieve the means to achieve the aboveabove

– If economic return of If economic return of (say) literacy is zero, (say) literacy is zero, it’ll still be carried outit’ll still be carried out

• Human Resource DevHuman Resource Dev– Human being as resource ~ Human being as resource ~

an input into production an input into production activitiesactivities

– The development of human The development of human resource is seen in terms of resource is seen in terms of their contribution to income their contribution to income generation – as an generation – as an investment, like any other, investment, like any other, in enhancing the productive in enhancing the productive potentials (generation of potentials (generation of income/output)income/output)

– Considered worthwhile if Considered worthwhile if Rate of return > Cost Rate of return > Cost (similar to Human Capital (similar to Human Capital Investment)Investment)

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Human and FOPHuman and FOP

• FOPFOP– i.e. resources used in the production of i.e. resources used in the production of

goods and services in economic ~ goods and services in economic ~ Land (Land (rr), ), Labor (Labor (ww),), Capital (i), Capital (i),

• CapitalCapital– can be used in the production of other gds; can be used in the production of other gds;

man-made not used up immediately – e.g. man-made not used up immediately – e.g. machinerymachinery

• Land or natural resourceLand or natural resource• Physical Capital vs Human CapitalPhysical Capital vs Human Capital

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Human Capital vs Human Human Capital vs Human ResourceResource

• Human resource is traditionally called labor, one of Human resource is traditionally called labor, one of the the FOPFOP

• But, modern analysis emphasized that human being But, modern analysis emphasized that human being are not predictable commodity are not predictable commodity “resources”“resources” with with definitions totally controlled by contract, but are definitions totally controlled by contract, but are creative and social beings that make contributions creative and social beings that make contributions beyond “labor” to a society and to civilizations.beyond “labor” to a society and to civilizations.

• Thus, the broad term Thus, the broad term “human capital”“human capital” has evolved has evolved to contain the complexities of this term.to contain the complexities of this term.

• In macroeconomics, the term “In macroeconomics, the term “firm specific human firm specific human capitalcapital” has evolved to represent the original ” has evolved to represent the original meaning of the term “meaning of the term “human resourceshuman resources””

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Human CapitalHuman Capital

• a.k.a human wealth ~ non a.k.a human wealth ~ non transferabletransferable

• Definition 1:Definition 1:

– ””CharacteristicsCharacteristics possessed by an possessed by an employee that make him/her more employee that make him/her more productive” (Rahmah, 1996)productive” (Rahmah, 1996)

– ““Skills, experience, knowledge, Skills, experience, knowledge, personality, appearance, reputations, personality, appearance, reputations, credentials”credentials”

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Human Capital …Human Capital …contcont

• Definition 2:Definition 2:– ““The stock of expertise The stock of expertise

accumulated by a worker. It is accumulated by a worker. It is valued for its income-earning valued for its income-earning potential in the future” potential in the future” (Begg, Fischer (Begg, Fischer and Dornbusch, 1987)and Dornbusch, 1987)

– Note: Wage differentials reflect Note: Wage differentials reflect differences in the productivity of differences in the productivity of different workersdifferent workers

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• In Macroeconomics:In Macroeconomics:– Refers to ambiguous combination of Refers to ambiguous combination of

the following:the following:

1.1. Social capitalSocial capital

2.2. Instructional capitalInstructional capital

3.3. Individual capitalIndividual capital

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• In Macroeconomics:In Macroeconomics:– Refers to ambiguous combination of the Refers to ambiguous combination of the

following:following:– Can be developed through investment in Can be developed through investment in

education, training etceducation, training etc– The current value of the human capital The current value of the human capital

investment can be used to determine investment can be used to determine one’s level of human capitalone’s level of human capital

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Human Resource Human Resource DevelopmentDevelopment

• Human resource development is a process of Human resource development is a process of upgrading human resourcesupgrading human resources

• Definition:Definition:– ““Is a planned, continuous effort by mgt to improve Is a planned, continuous effort by mgt to improve

employee competency levels and organizational employee competency levels and organizational performance through training and development performance through training and development program”program”

– Development involves learning that looks beyond Development involves learning that looks beyond today and today’s job today and today’s job • i.e. it prepares employee to keep pace with the i.e. it prepares employee to keep pace with the

organization as it changes and growsorganization as it changes and grows• K-employeeK-employee

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Human Capital Human Capital Development??Development??

What What

HUMAN CAPITAL HUMAN CAPITAL DEVELOPMENTDEVELOPMENT is all is all

about? about?

LET’S DISCUSS !!LET’S DISCUSS !!

FEM 4204 HUMAN CAPITAL DEVELOPMENT: OVERVIEW OF CONCEPTS

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