Human Capital Development and Economic Development

TABLE OF CONTENTS

DECLARATION

SUPERVISOR’S APPROVAL

EXAMINING PANEL APPROVAL

DEDICATION

ACKNOWLEDGEMENT

LIST OF TABLES

LIST OF TABLES

ABSTRACT

LIST OF ABBREVIATIONS

CHAPTER ONE

INTRODUCTION
1.0 Introduction
1.2 Background to the Study
1.2 Problem Statement
1.3 Purpose of the study
1.4 Study of the objectives
1.5 Research Question
1.6 Scope of the research
1.7 Significance of the study
1.8 Operational definition
1.9 Conceptual framework

CHAPTER TWO

RELATED LITERATURE REVIEW
2.0 Introduction
2.1 Human capital development
2.1.1 Education and Economic development
2.1.2 Training and Economic development
2.1.3 Skill building and economic development
2.2 Economic development
2.3 Human capital development and economic development
2.4 Related Empirical Studies
2.5 Summary and Conclusion

CHAPTER THREE

RESEARCH METHODOLOGY
3.0 Introduction
3.1 Research Design
3.2 Research Population
3.3 Sample Size
3.4 Sampling Procedure
3.5 Research Instruments
3.6 Research Quality
3.6.1 Reliability
3.6.2 Validity
3.7 Date Gathering Procedure
3.8 Data analysis
3.9 Limitations
3.10 Ethical consideration

CHAPTER FOUR

DATA PRESENTATION ANALYSIS AND INTERPRETATION
4.0 Introduction
4.1 Demographic characteristics of the respondents
4.1.1 Gender
4.1.2 Age
4.1.3 Marital Status
4.1.4 Educational level
4.1.4 Experience
4.2 Data presentation and Analysis
4.2.1 Objectives One
4.2.2 Objectives Two
4.2.3 Objectives Three
4.2.4 Economic Development
4.3 Relationship between Human capital development and economic development

CHAPTER FIVE

MAJOR FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.0. Introduction
5.1. Major of Findings
5.2. Conclusion
5.3. Recommendations
5.4. Recommendation for further research

REFERENCE

APPENDANCE A

BUDGET

APPENDANCE B

TIME FRAME WORK

APPENDANCE C

QUESTIONNAIRE

DEDICATION

I dedicate this Thesis to my parents, lecturers and friends. Without their patience, understanding, support and most of all love, the completion of this work would not have been possible.

ACKNOWLEDGEMENT

First of all Praise and much thanks be to the Merciful Allah, who granted me the opportunity to successfully complete my academic studies, and also i thank my parents mam Sa’dia Mo’allim Adam and special all to my families such as somo family, who were very helpful and helpful many times. Their support and encouragement helped me a lot in completing this Thesis successfully.

I am gratefully to acknowledge to my supervisor Mr. Farah Mohamed Abdi and also thanks to the Dean of business administration in University of Somalia (UNISO) Mr. Said Abdi Mohamoud, department of the Economics and management Mr. Mursal Hussein Mohamoud , then My thanks also go to my most significant academic instructors in the University and economics and management Department for their tireless and ambitious efforts to educate us at their best level., and I do here by expressing my deeply thanks to all students at university of Somalia (UNISO), particularly my classmate BC12A and individuals who directly or indirectly supported me their golden time, comments, and feedback on this Thesis by incorporating much of their feedbacks.

Finally, I would also like to grant my deep sense of gratitude to everyone, who contributed to my Thesis development process through encouragement, such the following

- Mr. Yaqub Muse Abdullahi
− Mr. Jamal Mohamoud Hussein
− Mr. Yusuf Ali Moallim Nor (U-man)
− Mr. Abdishakur Mohamed Khaddar
− Dr. Osman Ali Hassan (Osman shine)
− Ahmed Hassan Omar (Musharaf)
− Ismail Abdi-Aziz Ali
− Mohamed Da’ud Ali
− Hanafi Hassan Hirsi
− Hassan Nor Mumin
− Rahma Nor Mohamoud
− Abdirashid M Mohamoud
− Ali Khader Hussein
− Nor M Adam
− Najibullahi Sheikh Nor Isak − Fatmina Armia Abdullahi
− Drs Anab Hassan Sh-Abdurahman − Mss. Anisa Osman Mohamed
− Feisal Yusuf Farah
− Mr. Mohamed Yusuf Ismail − Hiis Abdullahi Mohamed
− Halima Mo’allim Mohamoud Ahmed − Farhan Abdurrahman Hassan
− Mohamed Abdukadir Hassan − Nim’a Osman Ali Hassan
− Farhia Hajji Hussein − Abti Ibrahim M Mohamoud − Sadak Yusuf Adam

LIST OF TABLES

Table 3.1 Population and sample size distribution table

Table 3.2: The Interpretations of the Mean Values

Table 4.1 Gender of the respondent

Table 4.2 Age of the respondents

Table 4.3 Marital Status of the respondents

Table 4.4 Educational of the respondents

Table 4.5 Experience of the respondents

Table 4.6 the relationship between Human capital development and economic development

Table 4.7 the role of education in Economic Development

Table 4.8 the role skill building and economic development in Somalia

Table 4.10 Correlations

LIST OF TABLES

Figure 1.1 sources: Researcher mode (2016)

Figure 4.1 Gender of the respondents

Figure: 4.1. Age of the respondents

Figure: 4.3 Marital Status of the respondents

Figure: 4.4 Educational of the respondents

Figure: 4.5 Experience of the respondents

ABSTRACT

The study focus on identifying the relationship between Human capital and economic development for Educational Institutions in Mogadishu, using descriptive analysis with view of increasing the efficiency and effectiveness of private universities in Mogadishu,. More specifically, this study aims to find out the effect of human capital development and economic development. The target or accessible population of the study was 60 of educated employee or instructors in educational institutions in Mogadishu an which a sample of 49 respondents was drawn using stratified random sampling and proportionate was used to determine sample size for each of the three educational institutions such as plasma university, modern university and university of Somalia, To achieve the objectives of the study, a survey design was employed. The study relied principally on primary data which was collected using questionnaires containing close ended questions for ease of analysis. Data was analyzed using descriptive with the aid of Statistical Package for Social Sciences (SPSS).Based on the finding in objective onewhichindicates the total average mean (3.17), the second objectives whichindicates the total average mean (3.031) ,, Based on the findings in objective third and fourth or specific objectives of the studyindicates the total average mean (2.95) so that the all objectives indicate a good sign or positive sign, means the overall Skill building and training of the educational institutions are very good While the overall mean of economic development was scored a (3.2 mean of which also indicates a positive sign and shows us the economic development is answered very good means that mostly agreed for my questions and finally for the findings indicate that the presence of positive relationship between Human capital development and economic development. (r =0.890at the level ( α ≤ 0.05) as shown in the table of chapter four indicates, so that the study indicates that human capital development have a significant and strong relationship towards the economic development. The researcher recommends further investigation should be conducted to collect data from other educational institutions such to see whether human capital development are increasing and effecting the economics in the country. The study also recommends that the Expand human capital investment on institutional capacity by strengthening the infrastructure of educational institutions to produce quality manpower to eradicate the level of illiterate and effect the economics of the country

LIST OF ABBREVIATIONS

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CHAPTER ONE

INTRODUCTION

1.0 Introduction

In this chapter, I was focus on the topics of Human capital development and economic development including the background of the study, problem statement, research objective and research questions that make strong bases of the study.

1.2 Background to the Study

According to (Claudia Goldin, 2/23/2014) the twentieth century clearly became the human capital century. It began first in North America but later spread to the rest of the world. How and why did that occur? Mass education in the United States was achieved early because of several characteristics, emphasized in my previous writings (Goldin, 2001, 2008). These characteristics were “virtuous” at the time and for some time after. Many remained in place, even as some lost their virtuous characteristics. Education in the United States has generally been open and forgiving in nature. Openness means that schools, by and large, allowed all children to enter. The openness of U.S. schools is related to that fact that ever since the mid-nineteenth century elementary and secondary schools were (fully) publicly funded by local and state governments. Forgiving means that students who did poorly in one grade were generally allowed to advance to the next. The forgiving nature is related to the fact that until recently there were few standardized tests that were required by law. As Theodore Schultz noted in his American Economic Association presidential address in 1961 many thought that free people were not to be equated with property and marketable assets (Schultz, 1961).

The earliest formal use of the term “human capital” in economics is probably by Irving Fisher in 1897. It was later adopted by various writers but did not become a serious part of the economists’ lingua franca until the late 1950s. It became considerably more popular after Jacob Mincer’s 1958 Journal of Political Economy article “Investment in Human Capital and Personal Income Distribution.” In Gary Becker’s. According to (Baah-Boateng W, 2013) clearly, human capital that has been the major driving force of the economies of developed world in the west and some South-east Asian countries has been lacking.

In Africa the weak human capital base of Africa is reflected in low literacy rate of many countries in the region. Inadequate institutions and support mechanisms for education and skill development continue to limit access to institutions of training and learning, weak human capital base in Africa is also reflected in the educational attainment of adult population. A greater amount of educational attainment indicates more skilled and productive workers to facilitate economic growth and transformation. The abundance of well- educated human resources also helps to facilitate the absorption of advanced technologies from developed economies. In 2010, the average number of years of schooling achieved by the average person aged 15 years and over in SSA was estimated at 5.23 years compared with 7.94 years and 8.26 years in East Asia and Pacific and Latin America and Caribbean respectively (William Baah-Boateng, 2013)

According to (Ghirmai Kefela and Ravinder Rena, 2007).In Somalia, by any international measure of development, is considered amongst the least developed countries in the world. Brain drain - the emigration of skilled workers - is pervasive in Somalia and is a serious barrier to using technology to help such nations expand their economies and raise living standards, an UNCTAD report warns. Somalia -- have lost more than half their university-educated professionals in recent years because these professionals have moved to industrialized countries in search of better working and living conditions. This has been intensified due to the conflict and war with Ethiopia in 2007. Lost "human capital", as it is called, can have serious consequences. The work of skilled professionals is a precondition for upgrading the productive structures and the exports of Somalia and other developing countries, and for improving the sophistication of domestic businesses not to mention for improving domestic health and education, which benefit entire populations. Without enough trained agronomists, biologists, engineers, scientists, doctors, nurses and information and communication technology (ICT) professionals, it is impossible for the firms and farms of Somalia to use technology to upgrade their products and efficiency - and that makes it difficult for them to face foreign competitors. The emigration of qualified people thus damages long-term growth and development prospects. This is particularly true for Somalia’s given their relatively low populations of skilled professionals. Nevertheless, human development indicators in Somalia remain extremely low. Ranked globally, this would place Somalia 161 out of 163 states in among seven neighboring countries, Human capital development Is a Continuous Proposition: A Study of North East African States in Eastern Africa and the Horn, Somalia ranks lowest in all indicators.

In the early 1960s the American economist Theodore W. Schultz coined the term human capital to refer to this stock of productive knowledge and skills possessed by workers.

The theory of human capital was shaped largely by Gary S. Becker, an American student of Schultz who treated human capital as the outcome of an investment process. Because the acquisition of productive knowledge is costly (e.g., students pay direct costs and forego opportunities to earn wages), Becker concluded that rational actors will make such investments only if the expected stream of future benefits exceeds the short-term costs associated with acquiring the skills. Such investments therefore affect one’s “age-earnings profile,” the trajectory of earnings over one’s lifetime. So the reason that I selected it gives more understanding about Human capital development can relate same kinds of economic development.

According to (Michael P. Todaro Stephen C. Smith 2012) Human capital Productive investments embodied in human persons, including skills, abilities, ideals, health, and locations, often resulting from expenditures on education, on-the-job training programs, and medical care, According to (Baah-Boateng W ,2013)A simple quantitative analysis to capture the relationship between economic transformation and Human capital development suggests a significant correlation between education and structural transformation of an economy. The paper makes recommendation to the effect that Africa’s human capital base can be enhanced through improved public investment in education in the area of teacher motivation and provision of adequate teaching and learning materials. According to (Olanrewaju And Abiodun S. ,2005) Human capital refers to the abilities and skills of human resources of a country (Adamu 2002).

According to (Maran marimuthu, Lawrence arokiasamy and Maimunah ismail, 2009). Human capitals refer to processes that relate to training, education and other professional initiatives in order to increase the levels of knowledge, skills, abilities, values, and social assets of an employee which will lead to the employee’s satisfaction and performance, and eventually on a firm performance. Rastogi (2000) stated that an important input for organizations especially for employees’ continuous improvement mainly on knowledge, skills, and abilities. Thus, the definition of referred to as “the knowledge, skills, competencies, and attributes embodied in individuals that facilitate the creation of personal, social and economic well-being” (Organization for Economic Co-Operation and Development or OECD, 2001: 18). The working definition will adopted by (Michael P. Todaro Stephen C. Smith 2012), the operational definition of the study means that the Human capital development can be for developing human capital In Skills and Education and Training for ability to develop economics as a part of the country.

According to (Michael P. Todaro Stephen C. Smith 2012), education is essential for a satisfying and rewarding life; both are fundamental to the broader notion of expanded human capabilities that lie at the heart of the meaning of development, inadequate institutions and support mechanisms for education and skill development continue to limit access to institutions of training and learning (William Baah- Boateng, 2013).

1.2 Problem Statement

As earlier mentioned, Investment in human capital plays an important role in a country’s economic development. By examining data from 98 countries in the period 1960-1985, Barro (1991) found a positive relationship between initial human capital and the growth rate of real per capita Gross Domestic Product (GDP). This means that when all other factors are controlled, countries with higher human capital may have higher economic growth. Higher human capital can basically determine a nation’s productivity which is considered a very important source of economic growth besides the expansion of inputs The emigration of qualified people thus damages long-term growth and development prospects. This is particularly true for Somalia’s given their relatively low populations of skilled professionals. Nevertheless, human development indicators in Somalia remain extremely low. Ranked globally, this would place Somalia 161 out of 163 states in among seven neighboring countries, Human capital development Is a Continuous Proposition: A Study of North East African States in Eastern Africa and the Horn, Somalia ranks lowest in all indicators. The weakening of government institutions, the collapse of social services, the disruption of livelihoods, the forced displacement of populations, and the stagnation of the economy, invariably lead to a general decline in Human capital development indicators.

No country has achieved sustained economic development without substantial investment in human capital. Several studies has evolved to analyze the channels through which human capital can affect growth (surveys include Barro and Salai-i- Martin, 1995; and Temple, 1999).

So there increase in human capital in educated and trained peoples and also still there’s no clearly economic development in Somalia, so that the study find out that problems in Somalia particularly in Mogadishu

1.3 Purpose of the study

The study focus on identifying the relationship between Human capital and economic development for Educational Institutions in Mogadishu, using descriptive design with view of increasing the efficiency and effectiveness of private universities in Mogadishu, Human capital development is investing in human capital at Skills, Education and Training for ability to make developing economics as a part of the economic country.

1.4 Study of the objectives

The objectives of this study are:

1- The identifying of the relationship between Human capital development and economic development.
2- To examine the role of education in Economic Development.
3- To investigate the role skill building and economic development. 4- To find out role of Training in economic development.

1.5 Research Question

1- What the relationship between Human capital development and economic development?
2- What is the role of education in Economic Development?
3- What is the role skill building and economic development?
4- What is the role of Training in economic development?

1.6 Scope of the research

This study is the relationship between Human capital development and Economic development on educational institutions in Mogadishu-Somalia, and was selected same institution such as Plasma University (PU), Modern University of Science and technology (MUST) and University of Somalia (UNISO) during March up to June in 2016

1.7 Significance of the study

This study is useful to add to the basic knowledge that is available for the Somali students and other scholars. This study also is great importance to departments of the government such minister of finance, minster of policy and planning, also minster of education, It also helps the Somali community. This study was also useful to policymakers, as it becomes an important reference when making policies concerning women entrepreneurs.

1.8 Operational definition

Human capital According to (Olanrewaju And Abiodun S. ,2005) Human capital refers to the abilities and skills of human resources of a country (Adamu 2002).

Education is commonly regarded as the major form of investment in human resources. There is the question whether one should consider all outlays for education as formation of human capital regardless of whether the particular teaching and learning would increase the productivity of labour (Frtz Machlu ,1982) Skill is the ability to convey information to another effectively and efficiently. Business managers with good verbal, non verbal and written communication skills help facilitate the sharing of information between people within a company for its commercial benefit.

Training means giving new or current employees the skills that they need to perform their job (Gary Dessler, 2012)

Economic development economic development is a necessary condition for the improvement in the quality of life that is development. Without sustained and continuous economic progress at the individual as well as the societal level, the realization of the human potential would not be possible (Michael P. Todaro Stephen C. Smith 2012).

Educational institution means “any public or private preschool, elementary, or secondary school, or any institution of vocational, professional, or higher education, except that in the case of an educational institution composed of more than one school, college, or department which are administratively separate units, such term means each such school, college, or department. http://definitions.uslegal.com/ Educational institutions are defined as entities that provide instructional services to individuals or education-related services to individuals and other educational institutions. http://www.oecd.org

1.9 Conceptual framework

illustration not visible in this excerpt

Figure 1.1 sources: Researcher mode (2016)

The figure 1.1 implies that the human capital is relates to economic development, and also human development means for Education, skill and Training. As the most developed countries clarify their human capital so that their economics developed by increasing their education and training productive people or Qualified employee.

CHAPTER TWO

RELATED LITERATURE REVIEW

2.0 Introduction

This chapter discusses literature reviews about Human capital development and economic development, This chapter consists of four sections, first section is concept of Human capital development; the second section is concept of economic development; the third section focuses on literature reviews about linkage or relationship between Human capital development and economic development, and the forth section is summary and conclusion of the study.

2.1 Human capital development

According to (Simon Appleton and Francis Tea 1998) The concept of human development centers around the notion that human welfare depends on various dimensions, many of which are not well captured by conventional measures of economic income (see Griffin and Knight, 1990; UNDP, 1990). Particular attention has been given to using measures of health and education as welfare indicators in addition to GDP per capita. Education, In conventional measures of economic output, health and education’s contribution is measured essentially by the costs of producing the outcomes, i.e. expenditures on schools and medical facilities. Such a procedure identifies inputs rather than outputs. Health and education are often subsidized by the state and in some countries education is compulsory for certain minimum length of times. Many, if not most, health and education services are produced by the public sector. Governments play a direct part in providing services very directly linked to human welfare.

According to (R. glenn hubband and anothany Patrick O’brien, 2006) human capital refers to the accumulation training and skill that workers, process, for example workers with a college education generally have more skills and are more productive than workers who have only high school degree.

The two authors (Simon Appleton and Francis Tea) supports that the Human developments are particularly attention to use a given measure of education welfare to indicate additional GDP per capital And also they argues that the Education and good health are intrinsic valuable of output Conventional measure of Economic output are contributions health and education by using essentially costs of producing outcomes. According to (FADI ABDULMOEIN AL SAKKA, 2014) Positive economic growth is enabled by the positive growth of human capital stock which in turn drives a country’s ability to innovate. A country’s ability to grow its human capital stock is the corner-stone for inclusion among the developed countries which enjoy a high level of productivity, due to their possession of a high level of human capital stock accumulation. Today, the difference between countries’ growth levels is attributed to the difference in the level of human capital they develop and reserve. There is a debate whether education and accumulation of knowledge are behind technological change or vice versa, but either way, the accumulation of human capital is essential for innovation and it drives in turn the countries’ technological change level. (Nelson and Phelps, 1966; Romer, 1990).

It is conceived that human capital plays the main role in economic growth, while the accumulated physical capital has the secondary role. Countries accumulate human capital usually through formal training ‘schools’, research and development institutes, and learning-by-doing (on-the-job training). Most of the Asian developing countries have witnessed a ‘miracle’ of transformational economic growth. For example, Taiwan, Hong Kong, and Singapore have become key exporters of a sophisticated range of products. This rapid progress is attributed to the fast growth rate of human capital accumulation and the attainment of new capabilities. Mainly this happens through a systematic approach of nurturing the required human capital. In order to climb the quality ladder and improve on product cycle, staff must keep on accepting new challenging tasks and roles as part of their specific on-the-job training aspiration, (Lucas, 1988; Lucas, 1993; Grossman & Helpman, 1991).

According to (Alexandra M. de Pleijt, 2011) earlier studies that examined the impact of human capital accumulation on growth are due to Barro (1991) and Glaeser et al. (2004). Both examinations, utilizing school enrolment rates, find a positive relation between human capital and economic growth. With respect to the early modern period, most analyses examining the influence of human capital formation on development utilized literacy rates as a proxy for education. Allen (2003) underlines an insignificant relation among technological progress and literacy in pre-industrial countries. Moreover, Mitch (1993), who focuses on England during the Industrial Revolution, concludes that Britain possessed only a modestly educated workforce. A more recent contribution of Baten and Van Zanden (2008) shows that human capital, as measured by book production, contributed to economic performance in the centuries prior to the 1800s. In addition to this, Galor and Moav (2002) suggest that human capital formation significantly contributed to the English Industrial Revolution. A positive relation between technological improvement and education contributed to Britain’s take-off and its evolution towards modern growth. Both empirical analyses of Boucekkine et al. (2005; 2007) support this conclusion of Galor and Moav. As explained in the introduction, the subject of this study reconsiders the connection between human capital and economic development in England. In doing so, it utilizes a new proxy for levels of human capital, i.e. educational attainment, for women, men and the overall population. This opposes the earlier contributions of Mitch (1993) and Allen (2003). It not only measures average literacy among the English population, but includes secondary and higher education levels as well. Furthermore, in contrast to the examination of Mitch, it investigates a longer period (i.e. 1307-1900). The analysis therefore expects a positive relationship between average years of education and economic development.

According to Muhammad Irfan Chani, Mahboob Ul Hassan, Muhammad Shahid, 21. May 2012 The decision to invest in human like the physical capital depends on the future needs and projects. There are two main reasons for investing in human resource formation, it increases the productivity of the labor force in the country and it also increases the employment opportunities. Another advantage of investing in human capital is it exploits the appropriateness of individuals for their skill development as uneducated individuals’ potential for skill development remained under-exploited. So, it can be said that investment in human capital is very necessary for an individual as well as a country for getting economic development (Chani et al., 2011). Ferroni and Kanbur (1990) developed a simultaneous equation model for investigating the interaction between rise in public expenditure on basic needs and income raising forces. This model highlights the importance of investing in physical as well in human capital.

According to Erich Gundlach , (November 1996) When asked about the major determinants of economic development in an international perspective, the average economist, or the World Bank, is likely to point to the important role of human capital formation. Taking a closer look at this common sense argument, it becomes less clear how the average economist world justify the presumed role of human capital at the macroeconomic level. The inclusion of human capital as a third factor of production also helps to bring in line the predicted and the actually observed rate of convergence.

According to world bank’s Reprot in 2006, Today, Somalia has indeed lost two entire generations that have received little or no education and training and have been unable to take up productive roles. This loss of human capital has and will continue to have enormous costs both to individual households and to a society attempting to rebuild a shattered economy and government. In education, the poor quality of and limited access to services although provided to a much larger extent than before the civil war years by communities, NGOs, and the private sector-continue to jeopardize the future of Somali children and the productivity of its workforce. Somalia has indeed lost two entire generations first to a failed government in the 1980s and then to civil conflict in the last decade and a half. These generations have received little or no education and training and have been unable to take up productive roles. Such a loss of human capital has and will continue to have enormous costs both to individual households and to a society attempting to rebuild a shattered economy and government.

2.1.1 Education and Economic development

However, several recent studies suggest that education is important both as an investment in human capital and in facilitating research and development and the diffusion of technologies. With respect to the relative importance of the latter two mechanisms, Vandenbussche, Aghion, and Meghir (2006) suggest that innovation is more important relative to imitation for countries close to the technological frontier. As a consequence, the composition of human capital between basic and higher education may be important, with initial phases of education being more important for imitation and higher education being more important for innovation. Vandenbussche, Aghion, and Meghir (2006) provide evidence from a panel of OECD countries in line with this argument, which - when applied to developing countries - might suggest that a focus on basic skills seems warranted for developing countries. We will come back to the issue of the relative importance of basic versus advanced skills, (Eric A.

Hanushek Ludger Wößmann, February 2007) According to (NIU Outreach May, 2005), Higher education has historically included economic development as part of its core mission. The colleges and universities serving the region have allocated fiscal, physical, and human resources and created entrepreneurship systems within the institutions to advance economic development. Senior administrators provide strong, visible leadership designed to

- Create a quality workforce by growing, training, and attracting the finest talent.
- Support current business and industry.
- Improve learning and teaching from pre-school through graduate school.
- Take strong and visible roles in regional initiatives.
- Disseminate research and promote technology transfer.
- Enhance the technology infrastructure.
- Promote livable communities
- Employ a diverse workforce

Higher education will be a dominant, if not decisive, factor in preparing workers with the robust skills needed to adapt to changing job requirements. The transition from manufacturing to the technology-based new economy dramatically raised the skill level needed to get a job. By 2005, 85 percent of all new jobs in America will require some level of higher education. The requirements for current jobs are changing as well; from 1973 to 2003, the percent of workers age 30 to 59 with some postsecondary education increased from 28 to 60 percent, and nearly threefourths of the increase in the need for postsecondary education was due to “upskilling” - employer demands for higher skills (Sampson, 2003; Sampson, 2004; Carnevale & Desrochers, 2003). In addition, higher education will be called upon to address the impending shortage of college-trained workers needed to replace the baby boomers; by 2030, nearly 30 percent of the workforce will be at or over the retirement age (Sampson, 2003).

Higher education prepares a quality workforce by offering instructional programs, matching instruction to the needs of business and industry, and helping individuals learn throughout their lives).

2.1.2 Training and Economic development

According to (Dr. Vincent Biruta, February 2013) the extent to which an appropriately skilled labor force is in place in a country largely depends on whether its residents have sufficient access to high-quality, demand-responsive formal and non formal education and training. This reality creates a significant challenge for institutions that have responsibility for providing education and training, including the actual education, the training providers, and the institutions responsible for creating an optimal framework for the system. Assuming that Rwanda will follow a path broadly similar to that described in the previous section of this chapter, it will become ever more important that larger numbers of Rwandan pupils complete at least basic education, as well as post basic education and training. Rwanda’s education and training system will also need to adjust to an increase in the demand for workers with catalytic skills, not simply technical skills. In countries where workers have increasingly been expected to have strong cognitive and catalytic skills, this requirement has particularly affected the provision of vocational training, where the initial focus was purely vocational skills. As in Rwanda, vocational and academic education streams in most countries initially tend to be separated. As catalytic skills became increasingly in demand, traditional vocational education—which did not teach these skills sufficiently—was seen as a “second-best” option for young people with no interest or ability in pursuing higher learning. As a result, the students sorted into vocational education, often from poor families, were by and large condemned to a lifetime of low-income work.( Dr. Vincent Biruta, February 2013).

The Dr. Vincent Biruta to its argues that every country has an important for improving the educated students and give them training and institutions that have responsibility for providing education and training including actual education training provider and institutions responsible for creating an optimal framework for system, Sufficient access demand to high quality of formal education and non formal education and training Created optimal framework system and responsible institutions. The Somali’s government can do that process and make it chance for graduating students to be part of the government.

2.1.3 Skill building and economic development

According to (Eric A. Hanushek and Ludger Wößmann, 2007)The previous discussion has stressed the importance of cognitive skills for economic outcomes - individual earnings, income distribution, and economic growth. By virtually any standard, the evidence indicates a strong causal impact of skills on these outcomes. Yet simply knowing that skill differences are important does not provide a guide to policies that might promote more skills. Indeed, a wide variety of policies have been implemented within various countries without much evidence of success in either achievement or economic terms. This history has led some to believe that education is not a useful policy lever to achieve economic development goals.( Eric A. Hanushek and Ludger Wößmann, 2007).

The two authors (Eric A. Hanushek and Ludger Wößmann) that argues The importance of cognitive skills for economic outcomes - individual earnings, income distribution, and economic growth, the wide variety of policies have been implemented within various countries.

According to (International Labour Conference, 97th Session, 2008) Skills development is central to both of these objectives. In order to achieve the first objective, the workforce must be “employable”, that is, capable of learning new technologies and workplace practices, engaging in social dialogue and participating in opportunities for continued learning. Basic and vocational education prepares young people for the world of work and ongoing workplace learning. The policy environment, quality of local training service providers, and growth strategies of enterprises, must all coincide in favour of expanding on-the-job training. Employment services must share information about occupations and skills needed in the labour market and ease the school to work transition. Furthermore, having a more skilled workforce can stem the decline in the employment content of growth in the formal economy; Countries have very different initial economic and social conditions, and different levels of skills and competences. Effective development processes are forged from a social contract of shared objectives to propel the economy forward, expand decent work and raise living standards. The design, sequencing and focus of their policies need to respond to their different levels of development. However, experience shows that all countries that have succeeded in linking skills with productivity, employment growth and development.

According to (Dr. Vincent Biruta February 2013), Despite these trends, two-thirds -f Rwanda’s workforce continues to be employed in nonwage agriculture, where productivity and earnings are low. For the country to meet its ambitious economic development goals, the move to a more modern, productive economy needs to be accelerated, which requires enhancing the skills of the labor force. Countries worldwide that have succeeded in making the transition to which Rwanda aspires have seen major transitions in the educational attainment of their labor forces as their GDP per capita steadily rose. For example, in Korea during the 1960s, 80 percent of adults had at most completed primary school. In 2000, four decades later, 80 percent of Korean workers had completed secondary or higher education. Economically successful countries do not simply require a workforce with higher educational attainment, but also a different skill set than less dynamic and less diversified economies. In particular, employers increasingly demand a higher level of behavioral, or catalytic, skills from their employees, including communication, team work, and decision-making capabilities. The absence of these skills can strongly constrain growth in developing countries. Employers in Cambodia, for example, find it more difficult to find workers with catalytic skills than with technical skills).

The two authors Clarified is most important for economic development and also dispute about economically successful countries do not simply require a workforce with higher educational attainment, but also a different skill set than less dynamic and less diversified economies as Dr. Vincent Biruta mentioned above.

2.2 Economic development

According to (AFRICAN DEVELOPMENT BANK GROUP, March 2013) Somalia is still characterized by a severe lack of basic economic and social statistics. The situation has been worsened by the two-decade conflict and the resulting collapse of the country’s institutions. The existence of de facto spatial and political entities results in complex economic realities and exacerbates the issue of data reliability and consistency for Somalia as a whole. The statistical system is very weak, and no comprehensive household income and expenditure survey has been conducted for a very long time .As a result, it is almost impossible to undertake planning and programming work, as well as to monitor economic and social developments and the MDGs. The common feature in the structure of the economy of the three sub-entities

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