The doctoral candidate of PhD, ZH.S. Bulkhairova

Management chair,   Kazakh Agro Technical University of S.Seifullin, Kazakhstan

 

THE MAIN FORMS INVESTMENT IN REPRODUCTION AND USE  HUMAN CAPITAL

 

Human capital determines the rate economic development and scientific-technological progress. The task of increasing productivity requires investment not only in capital, but in the human, because the latter determines the number and successful degree innovation implementation and efficiency in the use of fixed capital. "Physical capital in the modern economy generates 16 % of the total wealth, natural - 20 %, and human capital is 64 %. In Japan, Germany and Sweden the share human capital reaches 80 %" [1, Ð.85-91].

Human capital development is impossible without investment support, as employers, States, and individuals, as it requires the full and harmonious development of all its components. Human capital as a resource is attractive. Under investment in human capital is understood as a purposeful impact on the scope and conditions for the improvement of its qualitative characteristics, contributing to the development, stockpiling and returns in the effective employment form.

Analysis of the economists works such as Y.G. Bychenko, A. I. Dobrynin, S. A. Dyatlov, R. I. Kapelyushnikov, S. A. Kurganskii, W. I. Martsinkevich, I. V. Sobolev allowed us to identify a number of features that distinguish investments in human capital from other types investments.

1. The return on investment in human capital depends directly on the life of its bearer (the duration of working period).

2. Human capital is not only subject to physical and moral wear and tear, but can accumulate and multiply. Human capital depreciation is determined, first, by the degree natural deterioration (aging) of the human body, and decay inherent physiological functions, and secondly, the degree  moral (and economic) depreciation due to obsolescence  knowledge or changes in the value of education received.

3. The accumulation human capital, its yield increases up to a certain limit, which is limited to the upper border of the active labor force (working-age), and then sharply decreases.

4. In the formation human capital is a "mutual multiplier effect". Its essence lies in the fact that the learning process is improved features and abilities not only the student, but one who teaches that subsequently leads to an increase in earnings of both the first and second.

5. Not all investments in people can be recognized as investments in human capital, but only those that are public expedient and economically necessary.

6. The nature and types of investments in human due to their historical, national, cultural characteristics and traditions.

7. Compared to investment in other forms capital investments in human capital are the most advantageous from the viewpoint of both the individual and society. [2, Ð. Ñ. 10-14]

Acquired in the learning process human capital brings its owner additional income during his later life, giving him the opportunity to take a higher paying position. Thus, human capital value, from an economic point of view, understood as the return on investment in it. It's the people with their education, qualification, professional experience determine the possibilities and limits necessary changes in society and the income level depends on the quality of human capital. Investment in human capital development to provide socio-economic benefits at any level  economic development. [3, 26 Ð.]

In addition to the main purpose selects the other purpose of investing in human capital (largely dependent on the size of the investment) [4, P. 30]: investments at the level of socially guaranteed minimum; attachments, providing uniform productivity growth; efficient costs that contribute to innovation [5].

Investments in human capital are offset by revenue organizations (employers), so all these costs are productive. From this point of view the process formation and development human capital in rural areas need to be managed, which causes the need for ongoing investment in the development human capital in any form due to both the employee and at the expense of all agricultural producers.

Also between the interests the investor and human can be contradictions (table 1), as they both claim to be the magnitude of the increase in income resulting from the investment. [5, Ð. 237-240]

 

Table 1 - The expectations the investor and human at the enterprise level

The expectations human

The expectations the investor

Annotate

The salary increase human

Increase employee productivity

Goals both counterparties are achieved by increasing human capital, provided that the remuneration system is fairly distributes the FOT depending on the labor contributions

Career

Successfully functioning personnel reserve system, reducing time and cost of filling a vacancy

Increase in human capital allows its bearer to apply for higher positions, thereby allowing the investor (the company) to save on attracting candidates from

Job security, a sense of caring companies

 

Reducing staff turnover

Investment in human capital is perceived by the media as a manifestation of interest in itself and in its development. The human will be less reasons to change jobs, which will reduce employee turnover.

The enrichment  the work content

 

Productivity employees, the savings on the wages

The enrichment contents employee work brings him satisfaction, makes his work more interesting, and the employer gets the opportunity to reallocate functions among the performers

 

Human capital can take different forms. In General, any skills, knowledge or even information that will help the person to increase productivity and thus more money can be considered as one form human capital.

Typical forms investment in human capital are the following activities (figure 1).

Education

It can consist of formal higher education, in continuing his evening classes to improve the skills, for example, courses in computer literacy.

Training

Training may be a professional, that is focused on the acquisition knowledge and skills in a certain professional activity, or special aimed at the acquisition special skills.

Migration and job search

Labour migration is seen as an investment in human capital, as moving from a place with low wages in the area where they are high, leads not only to higher earnings, but also to make best use of the person skills.

Health and nutrition

The person's state health can be interpreted as its capital, part which is natural, hereditary, and the other acquired as a result effort and money of both the human and the society.

Finding information about the economy state

Means the search data on the firms situation in the market, the number vacancies. The search information may be engaged as a separate individual, being in the job search, specifying which profession is now more relevant and firms themselves.

Figure 1 - Typical forms investment in human capital

Note - compiled by the author

 

For a more detailed analysis conditions and factors external and internal environment investment, applying the methodology of SWOT - analysis, the author analyzes the investment process in human capital by identifying strengths, weaknesses, opportunities and threats (table 2). [4, 26 Ð.]

 

Table 2 - SWOT analysis the investment process in human capital development in the agricultural sector

Strengths:

Weaknesses:

1. The improving the quality  all related human capital components are to safeguard its competitiveness and resilience negatively affecting factors.

2. Improvement the professional qualification of  the human capital component  - growth, productivity and competitiveness a business entity, respectively, the increase income is not only the employer but also the employee, the economic prosperity of his family.

3. Raising the level human capital development in rural areas is a solution to the problem human security in the agricultural sector.

4. Long-lasting socio-economic benefits to the economy from investment in human capital development, as the period the employee's duties takes a long period its life.

5. The growth the intellectual human capital component - enhancing opportunities for upgrading not only the agricultural sector but also the economy of the country.

6. The return on investment in human capital has a higher effect on the effectiveness and duration, in comparison with investments in physical capital.

1. Investment is the individual, family, the subjects cost in the agricultural business and the state in the development human capital.

2. Limited opportunities for investment in human capital development for most individuals and families in rural areas due to their low levels income.

3. The imperfection the institutional basis for the development  human capital in rural areas.

4. Prolonged and indefinite period of return on investment in human capital.

5. Investing in staff training associated with the separation workers from the labour process.

6. The limitation calculation of socio-economic efficiency investment in human capital, the relative nature calculations.

7. Low level social responsibility in the agricultural business, low motivation and low interest many employers in the agricultural sector in the active investment in human capital development.

Opportunities::

Threats:

1. Well-paid, interesting, prestigious and challenging work, enhanced employment opportunities.

2. Career growth.

3. The growth rural incomes.

4. The circulation  human capital development: additional education generates income, part of which goes again on investing in development.

5. Investment in human capital is the creation an intellectual base and new opportunities for long and continuous use.

6. The information base for the development human capital of future generations.

7. Improving the quality life in rural areas.

1. High risk, real risk low return on these investments for the employer due to various reasons, including the workers migration.

2. Human capital, like other forms capital is subject to depreciation, and over the years, physically and mentally wear out.  

3. Without personal desire, abilities of the individual and his decisions the investment and effort will not bring the desired result.

4. At the low level and quality human capital of developing various forms its degradation.

5. Decrease motivation to work due to unjustified investments in human capital development.

 

We can identify the following features investing in human capital:

-the inability to uniquely identify the item cost, defined as investments in human capital;

- the diversity professional activity results of labor resources;

- the presence  a long period of time between investment and return from them;

- the difficulty determining the results corresponding to the specific investment;

-differentiation return on equity of education depending on the site, work experience and other not directly related to training [6, Ð. 124-129].

Thus, for the reproduction human capital in the agricultural sector requires appropriate conditions: a stable and sustainable development in rural areas; increase financial support for the implementation of all national and regional social programs in rural areas; social infrastructure rural settlements; continuous monitoring at the regional level unemployment and real income the rural population; diversification rural employment; the development training and retraining personnel capable of implementing tasks the innovation agricultural development model [7, Ð. 67-70].  The state plays an important role. Well-designed public policy influence through the creation on a grants system, additional safeguards and the application advanced package social guarantees for those groups, which have high employment potential and possibility its realization, is the most important part of the support.

 

References:

1. Kuhtinova L.G. Human capital and the development of service economy // journal of Creative economy. 2007. ¹ 3 (3). Ð. 85-91.

2. Mavrina N.A. Essence of human capital and investment characteristics in it// Bulletin of the Chelyabinsk state University. 2008. ¹ 29. Ð. 10-14.

3. Kamenevà K.P. Human capital system management in the agrarian sector of economy// author's abstract on competition a scientific degree economic candidate sciences, 2011, 26 P.

4. Bychenko Y.G. Human capital Formation: socio-economic aspects// monograph. Saratov, 1999

5. Buldashev E.S. The influence on the size of investment results, which investment in human capital// the Theory and practice of social development. 2013. ¹ 4. P. 237-240.

6. Rudenko M.N., Shnurenko A.V.Investment in human capital of Russia// Modern economy problems (Novosibirsk). 2010. ¹ 2-2. P. 124-129.

7. Kameneva K.P. Investment basis for the reproduction human capital in the agricultural sector of the economy// the Herald of the Voronezh state agrarian University - 2010. - ¹3 (26), P. 67-70