Human capital crucial for high-income status

KUALA LUMPUR: Investing in and nurturing the right kind of human capital is key to the country’s plan of escaping the middle-income trap, said Institute of Strategic and International Studies (ISIS) director-general Datuk Dr Mahani Zainal Abidin.

To become a high-income economy, the required human capital must have high productivity and could create innovation, she said after the launch of the United Nations Development Programme (UNDP) Regional Synthesis and Global Financial Crisis and the Malaysian Economy: Impact and Response reports here today.

Other steps to move out of the middle-income trap was through generating domestic investment and moving away from developing economies in finding new export markets, said Mahani, who co-authored the Malaysian report.

Dr Ajay Chibber, United Nations assistant secretary-general and assistant administrator and director of the regional bureau for Asia and the Pacific, said it was critical to put more emphasis on research and development (R&D).

This was important to attract and sustain human capital with TECHNOLOGY [] skills, which was crucial given that the country was at the juncture of transforming into a knowledge-based economy, he said.

Ajay said Malaysia invested 2.64% of its gross domestic product into R&D, while Taiwan invested over 3%. He added that while China invested only 1.5%, it was a great sum given the size of its gross domestic product.

Furthermore, the number of scientists and researchers per million of Malaysia’s population was smaller than these countries, he added.

According to Ajay, Malaysia is within striking range of achieving its 2020 goals, provided if it implements the recommendations in the report. It was a matter of getting the system going, he said.