The geopolitical value of human capital in an ideal world would have been one unwavering figure anywhere on the planet. But the reason people strategy allocates any time at all to ponder over the geopolitical value of human capital is that it is influenced by many factors. Where human capital needs to be assessed, categorized, and deployed, several factors enter the computational dynamics of it:
- Where they are located – these geographical factors determine all others
- Demographic factors like age, economic level, education level
- Economic trends like industrialization, patronage, regulatory support, and funding
- Macroeconomic factors like ease of doing business and opportunities for getting hired
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These items are intangible for the most part, and the geopolitical value of human capital is, or rather, was, a foregone conclusion for a long time. Cultural and political tropes would have the world believe that ‘the English are good ship-builders’ or something equally simplistic.
But there is more to the geopolitical value of human capital, especially in this day of the Information Age where an individual can study to gain specialized knowledge in any field and go on to make a contribution to the advancement of the industry from any part of the world. Modern advancements like transportation, digitization, and the openness of companies to consider various unconventional talent pools increase the potential geopolitical value of human capital.
Why is the geopolitical value of human capital indeterminate?
Well, not indeterminate, but extremely hard to quantify. This is because human capital itself, like human potential, is largely intangible and varies wildly. The geopolitical value of human capital is not an indicator of any ability or potential per se, given that some human workers can amass a wide array of skills through training, while others stay true to certain industries or nature of work.
That said, the greatest value is assigned to skills and attitudes of human capital when trying to determine the geopolitical value of human capital. Why? Simply because they cannot be duplicated by any other factors of production. Human workers weighing one factor against another and determining the right course of action – this bundle of abilities is rare. This is the one potential that artificial intelligence, machine learning, and neurolinguistic programming hope to decode to a certain extent. Still, human approver layers and supervisory sign-offs are required if these disciplines are to have commercial utility.
At best, the geopolitical value of human capital is a near-perfect approximation of what humans are capable of in each field. But it cannot be an undisputed figure.
Betterment of geopolitical value of human capital
As both expert sociologists and lay-persons have alike noticed, the trends on the human development index (HDI) indicate a turn for the better in the last two decades. As of 2020, India was 131st in rank on the HDI. The average life expectancy edges closer to 70 years, meaning individuals will be productive for a longer time in their lives. But it also means they’ll need to support themselves during a more tenuous and fragile retirement. The number of years spent in schooling has lengthened by 4.5 years. Likewise, the figures of multidimensional poverty have reduced from 1990 to 2019, with the late 1980s and early 1990s having as high as 50% poverty which has now come down to 32.7%.
In the socio-political and economic sense, however, the focus has shifted from taking relief in trends to how individuals fare over their lifetimes. Standards of living are low and wealth parity is high, meaning not everyone across India’s social fabric has access to the same facilities of healthcare and hygiene, and access to education, employment opportunities, and upskilling are not uniform.
Impact of climate change
A related matter that affects the geopolitical value of human capital is migration – which mainly happens for social or economic reasons. Migration is only going to increase uncontrollably as the effects of climate change become obvious. Fewer cities and coasts will be habitable and risk-free in the longer term. The consequent migration from flood-prone and tsunami-prone areas further strains city economies. This means a greater population vies for a limited number of jobs, driving wages down. The shift of demand and supply of talent can shift dramatically within the span of a few years based on the factor of climate change alone.
The way forward
The geopolitical value of human capital will first be recognized by companies and people that serve industries on the cusp of change. Environmental, Social, and Corporate Governance (ESG) continue to drive the sustainability of companies. As demand and supply for talent switch wildly based on whether companies adapt to the ESG factors or not, the geopolitical value of human capital is prone to seeing some dips.
This is a tricky situation, considering that many companies are looking to merely survive. High-performing companies may be able to participate in the ongoing requirements of ESG frameworks, but most companies will continue to focus on firming up their bottom line.
For businesses, it soon becomes obvious that social and corporate responsibility cannot be evaded or merely addressed in a nominal fashion. Technological transitions can also hit the geopolitical value of human capital harder as obsolescence sets in fast with increased automation.
A third confounding factor is political matters – most companies now wish to hire within their indigenous population before looking outside the borders for qualifications and talent. This is not a trend likely to change. A clear example of this is the fast-fashion brand H&M which had to pull out of China due to human rights violations. Many other fashion brands, among others, are at the receiving end of a geopolitical crisis. India’s fortunes with regard to manufacturing tenders, materials movement, and sourcing stand to fly higher in the post-pandemic world as big names swing funding away from some other Asian countries.
In this setting, it becomes important for the human capital themselves to rise to the occasion. They will have to upskill and meet the requirements of companies that have a progressive vision. In doing so, they have to prepare themselves for rapid shifts in skill requirements and demands and stay competitive. Career growth pace may not be as robust as they expect, but staying competitive and motivated is within the purview of job aspirants.
For the businesses too, the work is cut out. They have to aspire to meet higher visions of sustainability and corporate social responsibility above revenue metrics.
- The geopolitical value of human capital – How social and human capital could be your currency to succeed in Industry 4.0 | KPMG | Sophie Heading | 16 December 2019
- Human Development Index 2020: India ranked at 131st position by the United Nations Development Programme (UNDP) | Jagran Josh | ARFA JAVAID | December 31, 2020
- A geopolitical crisis cripples H&M. Nike, Adidas, and Visa could be next | Fast Company | ELIZABETH SEGRAN | April 7th, 2021
- Multidimensional Poverty Reduction in India between 1999 and 2006: Where and How? | Oxford Poverty & Human Development Initiative (OPHI) | Sabina Alkire and Suman Seth | March 2013
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