Glamor Economics

Chapter 49

Chapter 7 Section 3 The most expensive thing in the 21st century is talent—human capital

What is human capital?Specifically, human capital refers to the accumulation of knowledge and skills acquired by workers through investment in education, training, practical experience, migration, health care, etc., also known as "non-material capital".Since this kind of knowledge and skills can bring benefits such as wages to its owners, a specific kind of capital—human capital is formed.The higher the level of education, the richer the personal experience and experience, generally the more social output value will be created.Ordinary technicians do not earn as much as engineers, mainly due to the huge difference in human capital between the two.

In the post-industrial period and the early stage of knowledge economy, human capital will have greater value-added potential.Because human capital, as "living capital", is innovative and creative, and has the ability to effectively allocate resources and adjust enterprise development strategies and other market adaptability.The accumulation and increase of human capital contribute far more to economic growth and social development than the increase in physical capital and labor force. Schultz, a famous American economist who won the Nobel Prize in Economics, pointed out that in more than half a century In the economic growth of the United States, the investment in material resources increased by 4.5 times, and the income increased by 3.5 times; the investment in human resources increased by 3.5 times, but the income increased by 17.5 times.According to the statistics of Chinese economists, an increase of 1 million yuan in human capital investment in my country can bring about a GDP increase of nearly 6 million yuan in the next year, while an annual increase of 1 million yuan in materials can only bring about a 2 million yuan increase in GDP.It can be seen that the contribution of human capital to economic development is much higher than that of physical capital.

Most economists agree that human capital is one of the key factors affecting comparative advantage in international trade.Schultz cites differences in human capital to explain why international trade occurs and a country's type of foreign trade.He believes that human capital is the intelligence that resides in the human body, which is manifested in people's cultural level, production skills, proficiency, management ability and health status, and is the result of investment in education and training by the government, enterprises and individuals.People all over the world are similar in talent, and the difference in intelligence is caused by acquired human investment.Countries rich in human capital, such as the United States and Japan, have comparative advantages in the production and export of knowledge- and technology-intensive products, while developing countries that lack human capital are at a comparative disadvantage in the production of knowledge- and technology-intensive products.

[links to related words]

Human capital is the capital embodied in the human body, that is, the coagulation of the value of the producer's general education, vocational training and other expenditures and the opportunity cost of receiving education on the producer. The sum of stock of knowledge, labor and management skills and health quality.

(End of this chapter)