Productivity, human resource development, and technological learning

Abstract

It has been widely recognized that developing countries need to build their competitive advantage, moving from primary commodity and unskilled-labor intensive goods to skill-intensive products and services, through systematic expansion of human resource development. Japan and Asian NIEs are often quoted as a successful model of human-resource-led development strategy which allows them to catch up with other more developed economies. As sensible as it sounds, such a strategy that favors heavy investment in human resources poses real problems to many developing countries. Many developing countries in Asia-Pacific, for example, are still struggling with the problems of financing such investment, of mobilizing labor, and of imbalance between labor demand and supply, both in quantitative and qualitative terms.

Another suggestion points to the importance of technological advancement as a source of comparative advantage for developing countries. Indeed, in a competitive world of trade, even if a country experiences a deterioration in its export prices, it can still be competitive --and its real income can rise-- as long as its productivity in its export industries is increasing at a greater speed than the rate of the price decrease. It has been recognized that technological advancement can rarely take place in the absence of human capital, and hence, it reinforces further the argument for promoting human-resource-led development strategy.