Generic Strategic Approaches to Human Capital Development and Accumulation

Using human capital theory, resource-based theory (RBT), and transaction cost economies, this chapter presents three generic approaches that can be adopted by African countries to develop and accumulate human capital. Countries can either accumulate human capital internally through human capital development such as their formal education system, workplace training and development, and developing their indigenous knowledge system and informal education; externally through strategic immigration, foreign direct investments (FDI), and foreign study; or through using a hybrid of the two major approaches. In reality, countries generally use a hybrid approach as it is the most realistic approach to human capital accumulation. However, the extent to which the hybrid approach leans on either of the two other approaches depends on the needs and situation of each country. The crucial factor is that human capital accumulation is not left to chance but is planned for in a strategic manner. The chapter presents an in-depth discussion of the different routes within each strategic approach.