Annals of the University of Oradea: Economic Science (Jul 2016)
WHY DO WE NEED HUMAN CAPITAL INDEX?
Abstract
As technology advances, it establishes and operates on knowledge emerged from the factors of production increased from the role of the human factor, above all, be seen by a unit value that has growing resources and is able to move more and more production value to produce as before. Human resource development therefore plays an important role in an entity, a village, a region, a country's performance greatly affects the value established by the size of the observed area of development and development opportunities. Human capital endowment measures the cost of all types of education and training a person receives. The human capital stock of an economy is made up of the human capital endowment of an average person multiplied by the number of individuals participating in the economy. The human capital endowment referred to a sum of total investment in five types of human capital development, including not only formal education but also, quite prominently, informal education of both children and adults. Each component can be measured either in terms of direct expenditures or in terms of opportunity cost. The United Nations Development Programme publishes every year since 1990 the Human Development Index, with a view to the world countries in human development of the measure and compare. The Human Capital Report generates the Human Capital Index. The Index quantifies how countries are developing and deploying their human capital and tracks progress over time. It takes a life-course approach to human capital, evaluating the levels of education, skills and employment available to people in five distinct age groups, starting from under 15s to the over 65s. The Index covers 124 countries, representing between them 92% of the world’s people and 98% of its GDP. Human capital is not a one-dimensional concept and can mean different things to different stakeholders. In the business world, human capital is the economic value of an employee’s set of skills. The Human Capital Index reveals several trends and challenges in the current education, skills and jobs agenda and the future outlook for major economies it helps to rethink how the world’s human capital endowment is invested in and leveraged for social and economic prosperity and the well-being of all. Ageing economies will face more and more of their population’s cross into the 65 and over age group and their workforces shrink further, necessitating a better integration of youth, female workers, migrants and older workers. Youth-bulge economies face burdens of a different kind as a very large cohort of the next generation-one that is more connected and globalized than ever before-enters the workforce and with very different aspirations, expectations and worldviews than their predecessors. The Human Capital Index is among the set of tools that we hope will enable better decision-making in this direction.
