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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