By Zheng Xingchen, Research Team on “Strategic Studies on Effectively Expanding and Better Meeting Domestic Demand in the New Era”, DRC

Research Report, No.171, 2021 (Total 6236) 2021-6-24

Abstract: In face of the pressure from economic transformation in the 1990s, developed countries strengthened vocational training through investment into human capital, which proved effective in boosting high-quality economic growth. Their experience brings us the following important implications. First, it is necessary to optimize the productivity factor allocation mix for better coupling. Vocational training and other forms of human capital investment need to be increased in order to adapt labor force skills to the requirements of technological innovation. Second, the special value of human capital investment needs to be fully leveraged. By means of human capital investment that features high returns and externality, productivity factors can be directed to fields with high returns for investment at the national-level. Third, fiscal policies need to be coordinated with financial policies. The governmental expenditure structure needs to be improved by allowing its leverage effect to attract private investment, in a bid to dock with financial policies. Fourth, the policy transmission and guarantee also needs to be improved. The government can play a key role in ensuring sufficient training funds, improving the training and internship mechanism, unifying professional training standards, intensifying industrial supervision and management, and enhancing the penalty mechanism for violations.

Keywords: human capital, investment in labor force training, labor force skills, investment return, economic transformation