These slides will show how human capital will help in rural development of an economy.

1. Human Capital and Rural Development

2. Perception about human capital
• to most of the people it is a bank account,
shares and stock.
• These are all forms of capital in the sense
that they are assets that yield income and
other useful outputs over long periods of
time.

3. Human capital
economists regard expenditures
on EDUCATION, training, medical care, and so
on as investments in human capital. They are
called human capital because people cannot
be separated from their knowledge, skills,
health, or values in the way they can be
separated from their financial and physical
assets.

4. • Many studies have shown that high school
and college education in the United States
greatly raise a person’s income, even after
netting out direct and indirect costs of
schooling, and even after adjusting for the
fact that people with more education tend to
have higher IQs and better-educated, richer
parents.
• The earnings of more-educated people are
almost always well above average, although
the gains are generally larger in less-
developed countries.

5. Importance
• The concept of Human capital has relatively
more importance in labor-surplus countries.
These countries are naturally endowed with
more of labor due to high birth rate under
the given climatic conditions.
• This human resource can be transformed into
Human capital with effective inputs of
education, health and moral values.

6. • the problem of scarcity of tangible capital in
the labor surplus countries can be resolved
by accelerating the rate of human capital
formation with both private and public
investment in education and health sectors
of their National economies.
• The tangible financial capital is an effective
instrument of promoting economic growth of
the nation.
• The intangible human capital, on the other
hand, is an instrument of promoting
comprehensive development

7. • This importance of human capital is explicit
in the changed approach of United
Nations towards comparative evaluation of
economic development of different nations
in the World economy.
• The statistical indicator of estimating Human
Development in each nation is Human
Development Index (HDI). It is the
combination of "Life Expectancy Index",
"Education Index" and "Income Index“.
• Human Capital is the backbone of Human
Development and economic development in
every nation.

8. DEBATES ABOUT THE CONCEPT
• Some labor economists have criticized the
Chicago-school theory, claiming that it tries to
explain all differences in wages and salaries in
terms of human capital.
• Signaling theory
According to signaling theory, education does
not lead to increased human capital, but rather
acts as a mechanism by which workers with
superior innate abilities can signal those abilities
to prospective employers and so gain above
average wages.

9. • The concept of human capital can be
infinitely elastic, including immeasurable
variables such as personal character or
connections with insiders (via family or
fraternity).
• Some variables that have been identified in
the literature of the past few decades
include, gender and nativity wage
differentials, discrimination in the work
place, and socioeconomic status.

10. • Block' s theory
"marriage affects men and women very
differently in terms of their future earning
abilities, and is therefore an important cause
of the male/female wage gap“
Block alleges that there is no wage gap
between unmarried men and women, but
married men salaries are usually more than
married women. These wages, he contends,
are the opportunity cost of being a mother
and raising children

11. RURAL DEVELOPMENT
• Rural development generally refers to the
process of improving the quality of life and
economic well-being of people living in
relatively isolated and sparsely populated areas.
• Rural development has traditionally centered on
the exploitation of land-intensive natural
resources such as agriculture and forestry.
• Changes in global production networks and
increased urbanization have changed the
character of rural areas.
• Rural development is also characterized by its
emphasis on locally produced economic
development strategies.

12. DEVELOPMENT ACTIONS
• Rural development actions are mainly and mostly to
development aim for the social and economic
development of the rural areas.
• Rural development programs are usually top-down
from the local or regional authorities, regional
development agencies, NGOs, national governments
or international development organizations.
• But then, local populations can also bring about
endogenous initiatives for development. The term is
not limited to the issues for developing countries. In
fact many of the developed countries have very active
rural development programs.

13. DEVELOPMENT AGENCIES
• Aga Khan Foundation
The Aga Khan Foundation is committed to
reducing rural poverty, particularly in resource-
poor, degraded or remote environments.
• Programmes typically link elements such as rural
savings and credit, natural resource
management, productive infrastructure
development, increased agricultural productivity
and human skills development with a central
concern for community-level participation and
decision-making.

14. • Technical Centre for Agricultural and Rural
Cooperation ACP-EU (CTA)
• It was established in 1983 under the Lomé
Convention between the ACP countries and EU
member states
• KEY AREAS
• providing information products and services
• promoting the integrated use of communication
channels, old and new, to improve the flow of
information
• building ACP capacity in information and
communication management (ICM), ICT for
Development .

15. • USDA Rural Development
is an agency with the United States
Department of Agriculture which runs
programs intended to improve the economy
and quality of life in rural America.
• Rural Development has an $86 billion loan
portfolio, and administers nearly $16 billion
in program loans, loan guarantees, and grants
through their programs. For various reasons,
some of this funding currently goes
to urban areas to help develop and redevelop
suburbs and resort cities