ABSTRACT
Human capital may be defined as the knowledge, skills, long and healthy lives and competences of individuals that facilitate the creation of personal, social and economic well-being. Amartya Sen (1997) refers to it as means, which enable people to function. He conceptualised poverty as capability deprivation, which focuses on the failure to function. For instance, being adequately nourished, leading a longer and healthy life, being literate, and leading a better and wealthy life (Gordon and Spicker, 1999). The main capital the poor have in Bangladesh is their labour. The skill and quality of their labour affects their mobility and income-earning opportunities. Basic education and a healthy life are important dimensions of human capital. Therefore there is a need for higher human capital in order to alleviate poverty and the poor can benefit from government investment in education and health. Government policies and higher budgetary allocations to education and health are essential for increasing the human capital of the poor by increasing literacy, skills and health. In spite of considerable rhetoric concerning the importance of human-capital development in particular, government efforts in this area, as measured by the share of development budgets on education and health sectors, are indistinguishable, and certainly reflect little sense of priority. Actual development expenditure on education ranges from 12 to 14 per cent of the Annual Development Program (ADP) in recent years. This figure for health and family welfare stood at 6 to 8 per cent. Although the share of resource-allocation on education is 12 to 14 per cent of the total ADP allocation, public expenditure amounts to little less than 1 per cent of GDP, and per capita spending is around US $3.00 per year (Table 8.1). Since total public spending on education is low, its outlays – about 2.2 per cent of GDP – remain low relative to other South Asian countries (e.g. India 3.7 per cent, Sri Lanka 3.4 per cent) (World Bank and Asian Development Bank, 2003).
