Free Paper: What Are the Most Critical Determinants of the Development of Human Capital?

Published: 2022-09-09
Free Paper: What Are the Most Critical Determinants of the Development of Human Capital?
Type of paper:  Research paper
Categories:  Human resources
Pages: 7
Wordcount: 1692 words
15 min read

This literature review is developed from information that was gathered from research conducted in different parts of the world regarding the determinants of human capital development. The reviews cover the following subsections; foreign direct investment and human capital development; education and human capital development; spirituality and morality; human capital model and physical activity; local and regional development; challenges facing human capital development.

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The development if human capital is an important process in any economy because it helps in the creation of a workforce that is innovative and competent (Rastogi & Gaikwad, 2017). According to Son (2010), the macro-level understanding, human capital is a fundamental factor of production. Son (2010) also indicates that it is difficult to measure human capital due to the challenges of accounting for individual skill, as well as the complexity of designing a metric that can be used to make comparisons across countries. In Qatar, human capital management and development is a vital component of the country's vision 2030 (Mohannadi, 2017). However, Abduljawad (2014) points out that Qatar faces challenges of cultivating a knowledge-based economy even as the economy thrives to transform from a hydrocarbon-based to knowledge-based. According to Abduljawad (2014), the government, industries, and academic institutions are the major determinants in the development of a knowledge-based economy (KBE).

Foreign Direct Investment and Human Capital Development

Kar (2013) initially suggested that some of the spill-over effects of Foreign Direct Investment (FDI) in a country are the development of human capital. This idea was supported by a study that was conducted by Kar (2013) in India. India is one has been identified as one major destination for foreign direct capital since 1991. The study revealed that FDI positively contributed to an increase in student enrolment or public expenditure on higher education which is a sign of the development of human capital in the country. However, this study was only focusing on the correlation of issues that might be affected by other forces. For instance, the education policies in India might be responsible for the increase in enrolment as compared to the argument presented by Kar (2013). It is clear that the presence of FDI creates an employment demand for a human resource with different qualifications. This pushes the members of the society to attain the minimum threshold of securing the available employment opportunities. According to Mishra, Degtereva, and Paneru (2017), FDI has been crucial in the economic development of Nepal. Multinational companies have penetrated the country and created numerous employment opportunities for the citizens of Nepal. This was responsible for the economy shifting its reliance on the agricultural sector to include the industrial sector. This implies that FDI has been instrumental in triggering human development capital in Nepal. Similar arguments have been presented by different authors that include Azam et al. (2015), Dutta and Osei-Yeboah (2010) and Zhuang (2017).

Education and Human Capital Development

According to Jolo (n.d), Qatar has made a tremendous investment in improving its education system and the standards are internationally accepted. However, there has been a challenge regarding the labor force and the quality of education outcomes. This is due to the fact that the Qatar education system was initially designed to elevate literacy levels. Jolo (n.d) admits that there is a need to develop a human capital strategy and integrate it into the country's education system. Griffin et al. (2011) also established that the illiteracy levels, as well as the inadequate K-12 education system, have been a major challenge of human capital development in Puerto Rico. The significance of education in human capital development is also addressed by Mkhambetova et al. (2016); Shuaibu and Oladayo (2016); (Cristian & Laura, n.d). According to Jones and Ramchand (2013), China India and Indonesia have experienced an increase in school enrolment within the last two decades and this has contributed towards the development of a skilled and innovative workforce.

Spirituality, Morality and Human Capital Development

Gindo, Stapa, and Mohd (2018) have identified spirituality and morality as important inputs in the development of human capital. These authors have argued that some theories such as capitalism are amoral despite the fact that the actors are moral in nature. It is important to address the nature of the actors. Morality and spirituality present the innate abilities of people that can also be related to virtues and honesty. Kame and Tshaka (2015) have also supported the idea that morality and spirituality are a critical component of economic development that is missing in the modern approaches to economic development. Moore (2016), the religious landscape comprises of Shi'a and Sunni Muslims, Hindus, Christians and a few Buddhists. The state religion is Wahhabi Suni Islam but does not have the same social impact as compared to the influence of Islamic religion in the neighboring Saud Arabia. It is important to acknowledge that religion is a fundamental ingredient of culture which affects human capital development. However, little research has been conducted in Saudi Arabia regarding the influence of religion in the development of human capital in the Islamic state.

The Human Capital Model and Physical Activity

Bailey, Hillman, Arent, and Petitpas (2013) have noted that physical activity is one of the most underestimated investment as far as human capital development is concerned. According to these four authors, the Human Capital Model (HCM) contains evidence regarding the impacts of physical activities. The model entails five forms of capital that include physical, emotional, individual, social, intellectual and financial. Physical capital entails the elements or activities that directly contribute to physical health. This also entails positive influences as well as healthy behaviors that improve the physical well-being of an individual. Emotional capital entails mental and psychological health benefits of a person. Individual capital refers to characters of people that include life skills, values, and interpersonal skills. Social capital develops from the networks that exist among people or groups while intellectual capacity is the educational and cognitive aspects. Financial capital is the gains associated with earning power, productivity, work performance as well as job attainment.

These six forms of capital have been associated with physical activity. This means that physical activity is an important input in human capital development. Bailey et al (2013) have stated that lowering or elevating physical activity levels can affect critical movement skills, brain functioning, cardiovascular functioning, Bone-strength as well as activity (Khan, et al., 2012). The critical motivational factors in physical activity comprise of environmental, social and personal inputs. It is important to establish whether institutions in Qatar have adopted the concept of physical activity as an important ingredient in the development of human capital.

Local and Regional development

According to Raszkowski (2015), local development can trigger the process of human capital development. This has been defined as a complex process that takes place at a point in a developed space. In addition, several factors interplay to make the process successful. Plessis (2016) explains that elements such a favorable environment that facilitate acquisition or exposure to new experiences or experiments is good for local human capital development. The universality of current knowledge, as well as competencies, diverse but accessible scientific knowledge and favorable favorable culture, are all fundamental. It is important for local space users to interact with opportunities or informal interpersonal contacts to enable the learning process. The local development also requires the promotion of a belief that encourage action capacity, flexibility or non-standardization of solutions. The development approach must target to capture the interest of the local community through the representation of societal needs using strategic goals or solution (Raszkowski, 2015). It is evident that Qatar is striving to shift from a petroleum-based economy. However, there is a need to determine whether the existing and new organizations have made useful steps to trigger local development that can lead to human capital development.

Marosevic and Pandza (n.d) have pointed out that externalities that act on regional development can influence human capital development. Diebolt and Hippe (2016) argue that universities play a crucial role in the molding business innovation, community, and human capital development as well as regional institutional capacity. It has also been explained that regional development is a product of human capital development. Regions such as the OECD have been major determinants of economic growth in the entire European region. Regional organizations have always set goals that affect the nature of local policies as far as human capital development is concerned (Gennaioli, Porta, Lopez-De-Silanes, & Shleifer, 2013). Many countries around the globe tend to favor and tailor regional policies into their own (Saralidze & Donichez, 2013). Regional units can stand out as territory; units that dictate the pace of development of its human and social capital through well established territorial structures, organizations, and participation by different nations. In the case of Qatar, it is clear that the country has not had good diplomatic relations with neighboring nations such as Saudi Arabia and the United Arab Emirates (POMEPS, 2017). This tension has affected the cohesion of the Gulf Cooperation Council members. There is a need to establish whether this states of regional conflict can have an impact on the development of human capital in Qatar.

Challenges Facing Human Capital Development

According to research conducted by Aluko and Ola (2012); Weckroth and Kemppainen (2016), human capital development is a change process that can target societal values. In Nigeria, it was established that rigidity to change can prevent this process. the barriers of human capital development can also stem from inefficient institutions, poor political stability and lack of external support. In unique cases like Nigeria, the number of graduates cannot be used as an indicator of human capital development. It is important to have graduates who are both skilled and empowered by prevailing policies. However, most developing countries put a lot of emphasis of gaining theoretical knowledge that cannot be applied in their immediate environment. In Poland, Sienkiewicz and Wojtczuk-Turek (2013) established that at the company level, the development of human capital was affected by inadequate funding, lack of prioritization, low employee incentives, and organizational cultures.


Abduljawad, H. (2014). Challenges of cultivating knowledge in University-Industry-Government partnership- Qatar as a case study. Hartford Seminary, 58-77. DOI: 10.1111/muwo.12080.

Aluko, Y. A., & Ola, A. (2012). Human capital development: Nigeria's greatest challenge. Journal of Management Policy and Practice, 13(1), 162-177.

Azam, M., Khan, S., Zainal, Z. b., Karuppiah, N., & Khan, F. (2015). Foreign direct investment and human capital: evidence from developing countri...

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