WHAT IS THE IMPACT OF HUMAN RESOURCE DEVELOPMENT ON ECONOMIC GROWTH IN MAURITIUS

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1.0 Introduction

The socioeconomic level of a nation and its capacity for development is closely linked to its ability to communicate and transfer information and the capacity to build a knowledge economy that ensures survival in the current global setting, where the availability of essential human resources to exploit the new age of information and communication technology is a critical asset for global competitiveness. Over the past decades, the global economy has been witnessing tremendous changes . What we can observe is that still in the context of global environment and 'globalization', several changes have taken place, like the rise of new economic powers like China and India dominating most markets. Also, many countries have experienced rapid structural transformations, that is, moving from a primary sector based economy to tertiary ones, dealing with mainly services. Moreover, we can see that over the years, more and more developing countries have also started to engage and involve themselves in the industrialization process. Last but not least, several other variations have also occurred like the accentuating price of oil, erosion of preferential trade agreements benefitting developing countries and also the current human development plan is characterized by imbalance between supply and demand caused by weakness of training institutions and the lack of an efficient national human resources development policy. As a result, the educational system and its corresponding institutions remained stagnant.

Many countries have not remained insensible to such changes over the years. Witnessing these constant changes, the latter do not see their future to be bright and are conscious that they should develop strategies that will enable them to have some sort of competitive advantage over others. And consequently, a skilled and productive labour force has been identified as the only secure and renewable asset a country can possess.

Global economic variations have given rise to new trends in the global environment. Nowadays, the worldwide trend is completely different from what it was centuries back. The main aim of most countries is to have a skilled and productive labour force, which is the product of massive investment in human resource development (HRD). The recognition about the benefits of HRD has grown. Embedding people with skills, talents and knowledge is believed to bring promising returns over time. Investment in Human Resource Development is seen as the reward for more capable people in the workforce of tomorrow. The belief that reigns among countries is that investment in people is the most promising engine that will drive economic growth over time.

Poverty is often associated with Africa. But for the first time in a generation-amid all the bad news-there is hope for change. An increasing number of countries in sub-Saharan Africa are showing signs of economic progress, reflecting the implementation of better economic policies and structural reforms. These countries have successfully cut domestic and external financial imbalances, enhancing economic efficiency. They have given greater priority to public spending on health care, education, and other basic social services. In addition, there has been a growing movement toward more open and participatory forms of government that encourage cooperation between the state and civil society.

Africa is known to be the world's poorest continent , within which acute poverty reigns, corruption is a gnawing phenomenon and social conflicts and wars are as old as man. Africa is known to possess unhealthy populations with high infant mortality rates, bad nutrition and so on. It also counts an immense pool of unskilled people. Today, at the dawn of this new century, Sub Saharan African countries are also willing to seek for a change. Despite their fragile and exposed economic and social situations, sub Saharan nations have recognized that the best path to economic progress and advancements is through a healthy and educated population. An increasing number of countries in the sub Saharan Africa have attributed greater importance and priority towards Human Resource Development and have devoted massive public expenditure on health care and education. Investing in HRD is the key elements invigorated in the policy frameworks set by sub Saharan nations to promote sustainable growth and alleviate poverty. Such are the trends in the sub Saharan Africa nowadays.

Nonetheless, the economic and social situation in sub-Saharan Africa remains fragile and vulnerable to domestic and external shocks, and the region has a long way to go to make up for the ground lost over the past two decades. Despite some upturn in economic growth rates, poverty is still widespread and in many parts of the continent extremely acute. Investment remains subdued, limiting efforts to diversify economic structures and boost growth. Furthermore, a number of countries have only recently emerged from civil wars that have severely set back their development efforts while, sadly, new armed conflicts have erupted in other parts of the continent. These conflicts and other adverse factors, notably poor weather conditions and deterioration in the terms of trade, have led to some loss in economic momentum in the region over the past two years.

Sub-Saharan African countries therefore face major challenges: to raise growth and reduce poverty, and to integrate themselves into the world economy. Economic growth rates are still not high enough to make a real dent in the pervasive poverty and enable these countries to catch up with other developing nations. What is needed is a sustained and substantial increase in real per capita GDP growth rates in these countries, coupled with significant improvements in social conditions.

1.1 Problem Statement: MAURITIUS

Forming part of the African continent as well, Mauritius cannot be ignored concerning the issue of Human Resource Development. Considered to be a developing country in the region, economically stable, Mauritius is however not always shielded from the changing economic conditions both at the national as well as the international level, especially from the external shocks and forces. As such, since independence in 1968, governments after governments, the recognition about the fact that our people represent our sole asset and resource which can secure us overtime has grown. This is why in Mauritius, the issue of investing in Human Resource Development has been always been attached much importance and delicately treated. Investing in our people's education and health status was the only way to increase our global competitiveness, to diversify our economy and produce high quality goods and services, that is, to acquire a competitive advantage to promote economic growth over time. Furthermore, a deterring challenge to Human Resource Development and use in Mauritius is lack of an enabling environment. This includes the chain of bureaucracy, lack of adequate facilities and lack of innovative business. Not only has it adversely affected qualitative improvement, it has also hampered the economic state of the country. Although the number of qualified people has increased significantly during the last ten years, the level and quality of expertise available in the information and communication related fields is far less than satisfactory. Technical skills are scarce and valuable; Shortages have held back many information technology initiatives in the country. Local companies and government agencies have been unable to resolve this shortage. Consequently, institutional capacity needs to be built to improve and increase the existing human resources in the country.

In 2009, according to the UNDP Human Development Index (HDI), Mauritius was ranked 81st out of 117 countries and in 2010, Mauritius climbed up to the 72th place with an HDI index of 0.701. Though the adult literacy rate for Mauritius varies around 85.5%, government expenditure in HRD has been maintained over the years. From 2006 up to 2009, total expenditure as a percentage of total public expenditure was 12.6%,12.7% and 13.5 % respectively. For 2010, expenditure on education is believed to be around 12%.Regarding health, public expenditure as a percentage of total public expenditure for the year 2008 and 2009 have been 8.7% and 9.1% respectively.

As such, we can see that Mauritius has continually been addressing its human resources in terms of investment and legislations.

1.2 Aims and Objectives

Examining the connection between investment in HRD and economic growth in Mauritius is the aim of this dissertation. This piece of work shall comprise of the following:

Education and health are going to be used as proxies for HRD in the Mauritian context.

The different theories treating the link between HRD and economic growth shall be reviewed. Some empirical evidence will also be revealing the impact of education and health on economic growth respectively.

The trends on the HRD front achieved by Mauritius through its education and health sectors will be highlighted

Come up with policy implications based on the research findings derived by an econometric model considering the impacts and extents of investment in education and health care on economic growth

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