The Discouraging Condition of Human Capital Development  in Rural Egypt

By 

Mohamed Nabil Gamie and Mokhtar Ali Nomair

Department of Rural Sociology, College of Agriculture, Alexandria University, Alexandria, Egypt.

 Summary and Implications:  Thanks to  Ibn Khaldun, the fourteenth century  “grandfather of sociology”* and to his concept “human reconstruction”, Tocqueville’s associational activity, 1835, and to Durkheim’s social density, 1893 who all expected Shultz’ human capital, 1961 and the many contemporaries who grappled with the concepts of human and social capital. Emerging from these endeavors is the subject of economics of human resources and human resource development as one of the most indispensable activities of our age of cybernetics and information technology. Resort to the neglected man “human capital” and to his organization “social capital” is finally attended to after a long practiced obsession by technology and material traits of development.

In a modal area of rural Egypt, and using a random sample of 434 rural household heads from five villages in Gharbia governorate, the present study explored the nature of both human and social capital dynamics, how affected by some of their determinants and, finally, how they affect the fortune of man, that is, in terms of his benefits from development returns and of his achieved level of living. The main assumption is primarily that of Shultz himself who asserted that "while any capability produced by human investment becomes a part of the human agent and hence cannot be sold, it is nevertheless in touch with the market place by affecting the wages and salaries the human agent can earn. The resulting increase in earnings is the yield on the investment." Is it really beneficial to invest in human capital? Is it equally beneficial to invest in social capital? Which of both is mainly responsible for man’s economic prosperity and social well being? Is it mainly his talents, skills and competence; or is it his connections and social network? In other words, is it his human capital, or his social capital, or some kind of a mix of both?

Building on the available literature, and knowing that the competent human element requires seven basic skills pertained to perception, feeling of significance, influence, intra-personal skills of self-assessment and control, interpersonal skills of cooperation and empathy, systemic skills of adaptation and flexibility, and judgment skills, the present study defined human capital, theoretically and operationally, as composed of eleven components. Ranked by their found centrality and significance, these components are: (1) Level of education, found to enjoy the highest centrality score of 2.92. (2) Cultural openness, 2.24. (3) Innovativeness, 2.10. (4) Communication ability, 2.07. (5) Training level, 1.96. (6) Aspiration level, 1.49. (7) Achievement motive, 1.14. (8) Planning ability, 0.90. (9) Health level, 0.88. (10) Investment attitude, 0.76. (11) Empathy, with a score of 0.57.

 These centrality ranks express the degrees of relational interdependence between each component and the remaining others. In other words, a given component rank expresses its “social capital” within the family of the eleven human capital components.  Education, once again, is towering among other human capital components with regard to its mutual association in the system of human capital. Followed by cultural openness and innovativeness, education seems to direct our attention to the primacy of cognitions and mental processes in building competent human capital. This finding is extremely relevant to assessing the performance of our educational and training institutes. Behavioral elements of human capital, including communication ability, planning ability and training level occupy the medium centrality rankings, and the cathectic and attitudinal elements, i.e., empathy and investment attitude, occupy the bottom positions. These findings are supported by others indicating that 43.7% of people’s variability of their human capital levels is explained by education, 13.8% by innovativeness and 7.7% is explained by cultural openness. While each of the remaining components explain less than 7% of respondents’ variability in human capital levels, these eleven components evoke almost similar beta (standardized regression coefficient) values of human capital. Innovativeness, ranking number one, when increased by one standard deviation unit evokes 0.311 standard deviation unit increase in human capital. Training level is second evoking a beta value of 0.306 and all remaining components evoke values of either 0.206 or 0.205. This implies that our efforts toward developing human capital should focus on the eleven components as they represent a functionally interdependent system.

Following the same pattern of analysis, it was found that of the five components of social capital composite, leadership competence occupies the top centrality rank with a score of 2.05; public participation, 1.91; social cooperative network, 1.84; trust capital 1.79, and finally organizational membership ranked fifth with a score of 1.60.  Leadership promotion is mediated through promotion of leader’s public participation, cooperative activities and helping others, organizational membership and building trust in each of community members, organizations, other leaders and government which controls much of the bottlenecks and resources needed to grapple with, and utilize, as a leader. This is exactly why, in case of controlling other variables, leadership sinks to the bottom rank as it explains only 2% of respondents variability in social capital level and its beta value declines to a low, but significant, 0.166, whereas trust capital shifts and occupies the top rank explaining 59.1% of respondents’ variability in social capital, and evokes a very high beta value of 0.532. However, calculating the indirect effects of leadership and adding them to its direct beta raises the impact of leadership on social capital formation to a strong beta value of  0.495, almost similar to that of trust capital.

Discouraging results represented the answer to the most important question of this study; how does individual power compare to individual’s social power in relation to cropping one’s share of society’s development returns, and enjoying a high level of living?  Social power happened to engulf much of the answer. Social capital in rural Egypt explained 21.7% of people variability in attaining their share of development returns, that is, compared to only 1.6% for human capital. Still another surprising finding is portrayed by the fact that a standard unit increase in social capital triggers three times as much as that triggered by human capital in regard to the corresponding increases in one’s share of development returns. This is expressed by the corresponding values of ß’s of 0.410 and 0.137, respectively. Talented and skilled individuals cannot compete with social capitalists, as the latter, through their connections and involvement in their communities, enjoy a strong feeling of belonging and enjoy a higher degree of economic prosperity.

Is this a tragic symptom of lack of equity in rural Egypt? Yes, it is, we think.  However, our attention should be brought to focus on the viability and extreme significance of social education, which seems to be an undermined concept in our educational systems and in our training programs. The Egyptian system of education in addition to training programs available in most fields are mostly involved in indoctrination and memorizing. This philosophy, while hardly produces even the lowest levels of human capital, is extremely incapable of creating any of the social capital qualities proven to be the major vehicles responsible for taking man to economic prosperity, and to psychic and social well being.  The findings of this study went on to assure this contention by uncovering another discouraging fact. Actual indices of level of living reveal their strong dependence on respondents’ levels of social capital, rather than their levels of human capital. While 33.3% of respondents’ variability in their level of living was explained by social capital, only 6.9% was explained by human capital, and while a standard unit increase in social capital triggers a corresponding 0.460 unit increase in respondent’s level of living, only a 0.287 unit is triggered by a standard unit increase in human capital.

Innovativeness was particularly prominent among the dimensions of both human and social capital. One standard unit increase in respondent’s innovativeness triggers a corresponding 0.442 standard unit increase in his level of living. Planning ability ranked second in the human development system with a ß value of 0.162, followed by communication ability (ß = 0.154), and finally by cultural openness (ß = 0.130). Surprisingly, education had insignificant impact on respondents level of living.  Regarding social capital, respondent’s leadership competence is especially prominent with regard to its impact on augmenting his level of living as its ß value reached a high 0.352. Other social capital variables, excluding social cooperative network, were also significantly effective in raising respondents’ level of living with ß values ranging from 0.191 for trust capital to 0.155 for organizational membership.

In conclusion, the dimensions of human and social capital explored by this study, in spite of their variable centralities, represent a coherent and functionally interdependent system. Development, education, and training programs should not neglect any of the sixteen dimensions of the human resource capital. However, a special note should be paid to innovativeness and leadership competence, on one hand, and to education on the other, particularly with regard to their impact on respondents level of living. Innovativeness, as measured in this study, expresses respondent’s modernity in terms of attitudes and actual practice with regard to adoption of novelties. The innovator is characterized by a change-oriented and risk-taking personality and interest in material possessions. These characters are probably responsible for the innovators valuable possessions and active entrepreneurship, in turn, raising his level of living. Leadership competence is also a peculiar dimension of social capital in terms of its impact on raising respondent’s level of living. While leadership competence operated on respondents’ satisfaction with their share of development returns mainly through its indirect impact through other social capital variables, it operated on respondents’ level of living mainly through its strong and direct impact. This means that the official, or informal, position of a leader regardless of his trust capital, public participation, organizational membership or his cooperative network easily enables the leader to enjoy a remarkably high level of living. It seems that this fact is probably a sign of exploitation and misuse of leadership positions, and, thus, is another scenario of injustice and lack of equity in rural Egypt.

Education, as revealed by the above-mentioned findings, seems to have no impact on level of living. This statement is correct, only in terms of the direct impact of education. The beta value expressing this impact is insignificant 0.046 as mentioned in table 8 above. However, calculating the indirect effect of education on respondent’s level of living through the mediation of innovativeness, communication ability, cultural openness, and training level produces a significant beta value of 0.189 which is four times as much as that of the direct impact. In contrast to leadership competence, education is a fruitful enterprise, always branching out and diffusing its positive blessings not only in the society but also on the individual himself. Education is always the star of the show, and is hopefully waiting for qualitative more than the ongoing quantitative reconstruction.

* No better testimony for Ibn Khaldun than that of the great Sorokin, Zimmerman and Galpin (1930: I, 54) in their treatise “a systematic  source book in rural sociology, Minneapolis: University of Minnesota Press, 1930, I, 54”, when they state that he is, “as much as any one man, entitled to be called the ‘founder of sociology,’ and possibly more than anybody else is he entitled to be regarded as the ‘founder of rural-urban sociology.’ ” Not only that, but Flint (1894: 87) declares that “as a theorist on history he had no equal in any age or country until Vico appeared, more than three hundred years later. Plato, Aristotle, and Augustine were not his peers, and all others were unworthy of being mentioned along with him.” Bernard Lewis (1950: 9-10) says that “Ibn Khaldun stands alone as the greatest historical genius of Islam and the first to produce a philosophic and sociological conception of history,” and George Sarton (quoted from Issawi, 1950: xi) asserts that “not only is he the greatest historian of the Middle Ages, towering like a giant over a tribe of pygmies, but one of the first philosophers of history, a forerunner of Machiavelli, Bodin, Vico, Comte and Curnot.”