People plus

  • Quality education will help Nepal achieve its human capital potential
- Saloman Rajbanshi
People plus

Apr 23, 2014-

Economic development is all about the best and all-out use of one’s own resources. Japan, for instance, does not have a wealth of natural resources compared to other developed countries but this did not stop it from becoming one of the most advanced countries in the world. It simply capitalised on its technological innovation. In contrast, some countries have a wealth of natural resources but do not have the technology or know-how to exploit it. So the smart thing to do for them is to bring in human capital which can convert natural resources into economic goods and services. The most important question, therefore, is how to make best use of resources that are available in a country for its overall development.

Quality not quantity

Nepal is known for many of its potentials: hydropower, tourism, agriculture and so on. Surprisingly, many people forget about its human capital potential.  The fact is, Nepal currently does not have the human capital base that is required to fully explore its potential. Consequently, many potentials of the country remain unutilised even after almost 58 years of implementation of economic development plans. This calls for a reorientation of development priorities. Has Nepal adequately invested in human capital development so that it can achieve its potential? Nepal’s investment in human capital until now has been solely aimed at increasing numbers such as the number of literacy, life expectancy, rate of school enrolment, reducing school dropouts and so on. The qualitative part of human capital development has never been adequately addressed.

Human capital formation has much more to do with quality than quantity. It is not the number of schools but the quality of schools that contribute to human capital formation. Similarly, it is not the number of skills development service providers but the quality and the relevance of the skill they provide. Nevertheless, Nepal has achieved tremendous success in some areas which is reflected in its socioeconomic development indicators. There has been, for example, a significant decrease in the size of the population living below the poverty line— which was 42 percent in 1996 and went down to 25 percent in 2011. But again, the crucial question is how much has it contributed to human capital development. Not much.

Skilled humans

The demographic data Nepal shows that is a relatively young country that has a huge population bonus. Nepal’s current population of 26.6 million, based on national population census 2011, is quite significant. Forty percent of the population is below 15 years of age and 30 percent between 15 to 49 years of age. This means, 70 percent of the entire population is below 50 years of age. This makes for a significant size of the population that can contribute to economic development, but only if they are given a chance to acquire quality education and skills, depending on their age. This amply shows that the country has a potential to produce skilled human resources to not only meet the demand of both the national and international labour market. It could double the inflow of remittance by exporting the surplus skilled human resources which is an absolutely viable economic and popular choice as long as the working conditions and income abroad is decent. And the income is accounted for in the national accounts and invested in productive sectors within the country.

Human capital development is both the means as well as the goal of economic development. But it is not possible without developing a minimum level of infrastructure required to support it such as educational and training institutions, access to health services, equitable policies and regulatory frameworks, prevalence of fundamental civil and political rights, transportation and technology.

For Nepal, it is now time to refocus its development efforts towards human capital formation. Again, the focus should be on the production of highly competent middle-level technical human resources that can be absorbed by the labour market, both domestic and international, because globalisation has made labour as mobile as capital. Nepal needs to redouble both private and public investment to enhance the quality of schooling and technical and vocational education if it is to benefit from the dearth of skilled workforce in the international labour market. In addition, to enhance its quality of education and skills to meet international standards, it needs to significantly improve its regulatory mechanism and governance system.

Human capital

Nepal is an agro-based economy. Unfortunately, the agricultural exports from the country are diminishing while imports are increasing. This has to do more with the poor knowledge base of the country than with the inadequate infrastructure because technological innovations can overcome other development deficiencies. To develop any type of economy, one requires a strong knowledge base in place. Human capital investment has not been given due importance in the country and this has been continuously reflected in the run-of-the-mill performance of all sectors of the economy. The fact is, well-trained workers are more productive than workers with poor skills and training. Industrial competitiveness is driven by productivity and productivity is driven by knowledge. Nevertheless, social capital like work culture, positive attitude and social cohesion also complement the entire business environment.

The benefit of human capital development to the employers, workers and the economy at large is enormous. Education and skills enhance job security. Employers always want workers who are productive. As said earlier, productivity comes with knowledge and attitude. The dearth of skilled human resources is not only a barrier to foreign investment but is also a very tangible threat that could immensely increase the likelihood of capital flight, making an economy chronically sick. Therefore, it is time for Nepal to create a silicon valley of its own to achieve its human capital potential which will simultaneously help transform other potentials into reality.

Rajbanshi is associated with the ILO. Views expressed in this article are personal

Published: 24-04-2014 08:29

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