The FINANCIAL -- Development scientists, those who constantly measure growth,
distribution of wealth, quality of life across many nations often keep
repeating what has already been researched, proven and not-proven.
These scientists, by and large, are stationed in academic institutions, think-tanks and policy-level departments. To their credit, most of them in this specialised area of research, analysis and expertise are highly committed people who spend thousands of hours reading, writing, speaking, consulting and exchanging views on various aspects of human life. They also, directly or indirectly, shape global thinking and contribute to high level policy instruments which govern our lives.
One of the key areas of focus for some years now has been human capital development. The very notion of viewing humans as providing a talent-based resource capital necessary for development and growth of nations, and the use of the phrase “Human Capital”, as compared to physical and financial capital is relatively new, and somewhat revolutionary. What is astounding is that, on a global basis, despite many years of focus on human capital development as the key driver of change and growth, the philosophy of viewing men and women as essential ingredients of a nation’s growth has remained stunted, looking more like a lip-service to the idea. At best, mainly in emerging markets, there has been some effort to re-think, revamp and restructure the educational system, strengthen vocational and training institutions and upgrade the knowledge and skills base of the society.
In more developed countries, the emphasis on education and training, research and development, innovation and entrepreneurship have been well planned, funded and guided. In the less developed countries, human capital development strategies are far less funded and far below the expected norms, with illiteracy and poor education among millions being a constant plague contributing to underdevelopment and poverty.
Human capital development has a number of dimensions. One is knowledge and skills levels which are essential for growing an economy, across all industrial sectors from mining, manufacture, the professions and agriculture. Human capital is also about the level of awareness people have about democracy, human rights, the need to demand and obtain their space for peace and prosperity as well as their own contribution to the development of a nation and of humanity. The totality of human capital creates a capability space in a society which is easily distinguishable, one from the other. And, it is the level of this capability space which finally determines the trajectory of a nation’s growth, well being and indeed of peace and prosperity.
Development scientist have, for long, dwelled far too much on GDP numbers, inflation rates, purchasing power parity and have conjectured many different and incoherent ways of framing a pretty picture of wealth, power and glory of nations. This has been a calculated folly, driving both ordinary men and tyrants around the world to continue to seek material wealth at the expense of the quality of life of millions. It has also resulted in wars, conflict zones, military build-ups and eventually skewing of economies where vast amount of natural and human resources are recycled into weapons of destruction.
Harvard’s Ricardo Hausmann has been researching patterns of growth among nations, trying to identify the triggers for growth – from surveying landlocked country constraints to range of other attributes which aid or retard growth. One of his latest focus has been on “capability space” created in societies, where one group is superior to the other. He argues that this space which consists of the high end of knowledge, skills and competencies which are more valuable and which can sustain growth rather than the pyramids of numbers. This capability space, created among industries and technologies, is being shaped by the focus of their engagement in specific products and processes and is often the result of the economic environment in which human capital is allowed to grow. There is a close symbiosis between what people do often and what they learn from doing. The clear twist in the argument is that human capital development, the knowledge and skills base, are often the by-product of a nation’s own strategies and focus on various elements of growth, aided by a formal and informal environment in which learning takes place.
In Hausmann’s pursuit of an answer in determining how the distinguishing “ capability space” is created in societies and nations, capabilities which are unique, what comes out as significant finding is that the planning and growth of specific industries, based very much on the resources a nation has, creates both a culture and capability platform. And this capability space is more important for growth of a nation than what the numbers related to GDP or inflation or even investments can deliver. It is very much a prophetic notion that, akin to Darwin’s “survival of the fittest” theory, that growth in the future will no longer be driven simply by mountains of wealth made by governments and corporations, but by the ascendancy of a nation into the “capability space”.
Hausmann has not necessarily looked at the more spiritual side of life in his capability space theorem. Damagingly enough, most management and development scientists have hardly taken notice of the need to build the “spiritual capability space” in which we recognise that this earth is inhabited by people who are constantly in search of happiness and well being and that growth and development strategies must all be subservient to this primeval pursuit.
Reworking the knowledge and skills base, the development and sustenance of the “capability space” in a nation becomes an enthralling engagement as this process needs to look at every aspect of what we all are and where we are heading in our pursuit of understanding the essence of life in a highly competitive and confused global economic system which gives little comfort now and for the future.
Creating and sustaining a collective capability space which gives a nation a certain recognisable brand is an ideal pursuit. Emerging markets have done well during the last few years of turmoil and chaos. It is mainly on account of the resilience of its people who are willing to take the hard knocks and the wisdom of its planners and regulators. A clear focus on taking its people, as a whole, to a higher level of capacities in every sphere of economic and human life would add much power to the current “off-the-launch-pad” economic take-off.