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Several earlier chapters have mentioned the important role of human capital in economic growth and development. We now focus more directly on Investment in Human Capital, including any and all investments in improving human capabilities. Chief among these are:

  • Primary Education, Secondary Education, University Education and Research,
  • Business Training and Research Programs, including “on-the-job” training,
  • Vocational Education, and
  • Learning by Doing.

Without doubt, the first category of human capital investment is the most consequential. We will devote most attention to it.

But the role of the other categories should not be ignored. The category “learning by doing” is interesting in and of itself. In Nobel Laureate Kenneth Arrow’s study of airframe manufacturing in World War II, increased amounts of labor and capital did not fully explain the tremendous productivity of U.S. aircraft plants: the U.S. made more B-24 bombers than all the aircraft produced by Japan. Why?

The effects of learning by doing.

Aristotle defined “learning by doing” 2000 years ago.

To quote:

"For the things we have to learn before we can do them we learn by doing them."

At this point, it is helpful to note that throughout this Chapter, numerous examples of human capital investment and its implications are given. One of the sources cited most often is a long series of studies from the National Bureau of Economic Research (NBER), a nationwide network of economic researchers with headquarters in Cambridge, Massachusetts. The NBER traces its origins back to the late 1920s.

Human capital: theory and applications

Economic thinks from David Ricardo and Karl Marx and J.M. Keynes viewed capital merely as physical assets owned by capitalistic firms. This view prevailed in economics until well into the 1950s. Then, the work of, first, Theodore Schultz and then the 1964 publication of the book Human Capital by Gary Becker

For a good retrospective on Gary Becker, see “Gary Becker (1930-2014)”, Science, June 13, 2014, 344(6189):1233.

changed forever how economists and policymakers view capital. Both were Nobel Laureates in Economics; both spent most of their careers at the University of Chicago.

This revolution in economic thinking began with an article by the father of the Human Capital Concept: Theodore Schultz of Chicago. His 1961 contribution “Investment in Human Capital” was a true landmark in the Annals in Economics. He asserted that the definition of capital need to be further expanded to include forms of human improvement. To quote:

"Although it is obvious that people acquire useful skills and knowledge, it is not obvious that these skills and knowledge are a form of capital, that this capital is in substantial part a product of deliberate investment, that it has grown in Western societies at a much faster rate than conventional (nonhuman) capital, and that its growth may well be the most distinctive feature of the economic system."

Schultz was led to think of the idea of Human Capital from his experiences in post-war Germany (1946-48) where he examined the effects of allied carpet-bombing of Nazi-Germany.

c.f. Kurt Vonnegut’s novel, Slaughterhouse Five, which depicts in striking terms the effects of Allied bombing on the City of Dresden in Germany.

The Allies had believed that carpet-bombing of Dresden, Frankfurt and other German cities would bring the German war machine to its knees quickly. But that did not happen. Large land forces from the U.S. and U.S.S.R. were needed in 1944-45 to defeat the Nazi.

Questions & Answers

Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
What fields keep nano created devices from performing or assimulating ? Magnetic fields ? Are do they assimilate ?
Stoney Reply
why we need to study biomolecules, molecular biology in nanotechnology?
Adin Reply
yes I'm doing my masters in nanotechnology, we are being studying all these domains as well..
what school?
biomolecules are e building blocks of every organics and inorganic materials.
anyone know any internet site where one can find nanotechnology papers?
Damian Reply
sciencedirect big data base
Introduction about quantum dots in nanotechnology
Praveena Reply
what does nano mean?
Anassong Reply
nano basically means 10^(-9). nanometer is a unit to measure length.
do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
Damian Reply
absolutely yes
how to know photocatalytic properties of tio2 nanoparticles...what to do now
Akash Reply
it is a goid question and i want to know the answer as well
characteristics of micro business
for teaching engĺish at school how nano technology help us
Do somebody tell me a best nano engineering book for beginners?
s. Reply
there is no specific books for beginners but there is book called principle of nanotechnology
what is fullerene does it is used to make bukky balls
Devang Reply
are you nano engineer ?
fullerene is a bucky ball aka Carbon 60 molecule. It was name by the architect Fuller. He design the geodesic dome. it resembles a soccer ball.
what is the actual application of fullerenes nowadays?
That is a great question Damian. best way to answer that question is to Google it. there are hundreds of applications for buck minister fullerenes, from medical to aerospace. you can also find plenty of research papers that will give you great detail on the potential applications of fullerenes.
what is the Synthesis, properties,and applications of carbon nano chemistry
Abhijith Reply
Mostly, they use nano carbon for electronics and for materials to be strengthened.
is Bucky paper clear?
carbon nanotubes has various application in fuel cells membrane, current research on cancer drug,and in electronics MEMS and NEMS etc
so some one know about replacing silicon atom with phosphorous in semiconductors device?
s. Reply
Yeah, it is a pain to say the least. You basically have to heat the substarte up to around 1000 degrees celcius then pass phosphene gas over top of it, which is explosive and toxic by the way, under very low pressure.
Do you know which machine is used to that process?
how to fabricate graphene ink ?
for screen printed electrodes ?
What is lattice structure?
s. Reply
of graphene you mean?
or in general
in general
Graphene has a hexagonal structure
On having this app for quite a bit time, Haven't realised there's a chat room in it.
what is biological synthesis of nanoparticles
Sanket Reply
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
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Source:  OpenStax, Economic development for the 21st century. OpenStax CNX. Jun 05, 2015 Download for free at http://legacy.cnx.org/content/col11747/1.12
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