I.V. Kochetkov, E.A. Tsybina, Ph. D in Pedagogics.

Ulyanovsk State Techical University, Russia

Human capital as the priority of investment

Human capital is one of the main products of economy that is as important as the main, physical capital.

Lester Troy says in his book The Future of the Capitalism (1997) that human capital will replace the physical one. “Qualification, education and knowledge can have a simplified name “human capital.” It may seem that no great changes will be made if physical capital is replaced with the human one, but it is not true. There are some distinctions, but they are far more important than the likeness if we define that kind of capitalism when human capital is the main factor of economy, but not the supplement to the physical one [1].

The term human capital defines a person as a bearer of skills, knowledge and abilities, as well as a corpus of a nation’s knowledge that is a resource of social and economic development.

There are main features of human capital:

1. Human capital is a part and parcel of people, no matter if it is a certain company’s staff or the whole nation.

2. One part of human capital is inherited physiological features (sometimes also called health capital), and the other one is knowledge and skills gained by the efforts of the society and the person himself.

3. Human capital is one of the most important factors of economical development and can be used for social production as well as other types of capital.

4. Human capital is used to gain profit, which motivates people to get education and develop their skills.

Human capital requires some costs:

- to keep people healthy;

- to bear and raise children;

- to get education;

- to develop skills;

- etc.

Therefore, no human capital can be formed and developed without investing in people. Generally, investment is spending money in order to gain more money in the future. Investment has to provide economic growth and development both of a person and the whole nation.

Investment in human capital has such distinctive features as:

1. the profit strongly depends on the age of a person (able-bodied term). The earlier money is invested, the earlier the profit gained. But it should be considered that larger and longer investment brings a bigger income.

2. There is an aging and moral depreciation of human capital because of both physical prosesses and the obsolescence of a person’s education and skills. Human capital can also be accumulated and increased when a person gains experience or if he is retrained.

3. Profitability increases while human capital is being accumulated and does so up to the peak of a person’s able-bodied term, then it dramatically falls.

4. There is a so-called mutual multiplying effect: while training and retraining not only the trainee gains knowledge and improves skills, but also the trainer does so, which brings an income to both of them.

5. Only economically reasonable investment in people is investment in human capital.

6. Investment in people depends on the nation’s history, its culture and traditions. Thus, the level of education and choice of occupation often depends on family traditions and parents’ education.

7. Point of view a person as well as the whole nation [2. c. 316].

There are 2 main trends:

1. Investment in health. Such investment is basic for the human capital, as the able-bodied term is extended. Health is not only the factor of economic development but a case of the national safety. Health protection makes life longer, which extends the term of human capital. Health depends not only on public health services but also on ecology, genotype and mostly on lifestyle.

2. Investment in education. It helps to improve workforce and human capital.

Universal experience proves that great investment in human capital is the most important factor of the economic growth and development. Smart investment in human capital gains almost 3 times as much profit as it is invested in technologies.

Nowadays economy tends to be innovative, both knowledge and information determine the success of business, so the human capital is of primary importance and is an indicator of the society’s well-being. Thus, well-being and development of any nation depend on the human capital, that is why it is very important to invest in it generously and smartly at all levels.

References:

1. Маслов, А. Инвестиции в человеческий капитал. [Электронный ресурс] : Еженедельное независимое аналитическое обозрение / А. Маслов – Режим доступа : http://www.polit.nnov.ru/2006/11/07/capitalinv .

2. Блаунг, М. Методология экономической науки, или Как экономисты объясняют / М. Блаунг // Изд-во: Журнал «Вопросы экономики», 2004, с 527;

3. Селезнёва Е.В. Инвестиции в человеческий капитал. // Экономика и менеджмент инновационных технологий. – Февраль, 2012. [Электронный ресурс]. URL: http://ekonomika.snauka.ru/2012/02/429 .