Osmosis between human capital and development and its impact on the 21st century economy - a review

Abstract

In the knowledge-based economy of the 21stcentury, educated human resources are seen as a capital asset invested in the entity, and human capital theory seeks to explain, from an economic perspective, the phenomena arising from this process. The development of education and scientific spheres requires huge long-term investments, which must be analyzed from a social approach. Neither evaluation experience nor the methods applied provide a clear-cut solution, so evaluating an investment in human capital is a complex problem from both a practical and a scientific point of view. This research started from the hypothesis that investing in human capital will provide competitive advantage and sustainability in the complex world of the economic environment, reviewing the theory and evidence on the economics of human capital. Triangulation was chosen as a research method being considered the most adequate for the expected results and additionally because it allows to identify the most relevant aspects of this field that endorsed the proposed hypothesis. The main conclusion and results are that the emphasis has been placed on human capital just at the personal level, rather than at the level of unity and organization. Furthermore, research into the channels that have a causal effect on development has revealed that education is considered an instrument of developing human capital that promotes direct economic growth. Data analysis demonstrates that the theory of human capital is a convincing explanation for economic growth. In addition, the findings of the research have shown that the debate over equality vs. efficiency in economic development is centred on the human capital dimension.