Abstract capital indicators. The overall objective of the


is a transitional country in the Western Balkans region and joins one of the
countries with the highest levels of poverty on the European continent. Human
capital is an important factor of a country’s economic performance. In the
field of education the country has undergone some important reforms in the last
decade and statistics show that Albania has achieved significant improvements
in terms of human capital indicators.

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overall objective of the study is to research the link between human capital
and poverty in Albania. The main purpose of this study is to test the capital
hypothesis measured by education, has a positive impact on poverty and
econoimic growth in Albania.

poverty reduction and economic growth targets have not been well-developed,
despite expectations that improvements in education are accompanied by improved
income, hence economic growth and poverty reduction. The paper analyzes the
relationship between education as a point of growth of human capital and
economic growth of the country, possibly poverty reduction and provides
recommendations for improving policies that can improve this future

Keywords: Human capital
formation, economic development, economic growth, developing country, education

Research Objectives:

of Theoretical Relations between Human Capital and poverty with particular
focus on transition countries.

of the overall economic and social context, focusing on the situation of
education and poverty in Albania and the performance of indicators over the

specific policy recommendations to be followed for regarding the formation of
human capital, in view of its impact on poverty reduction and economic growth.

Research Questions?

is the importance of higher education for Albania?

are the main effects and consequences of higher education?

is the impact and the effects of higher education on economic growth?


study will analyze the impact of human capital on economic development
using  data:

The research plan for this study contains
in the first step an analysis of the situation regarding education and economic
development in Albania, through the use of secondary data as well as reviewing
the links and trends that indicate the country’s official data using secondary
data obtained from the official sites of Albanian institutions.

The next step involves the analysis of the
multidimensional nature of human capital and the critical review of theoretical
and empirical literature on consumer determinants and the level of education at
household level and the ways of determining determining factors and results
derived from research into word.

Also, the questionnaire will be used for
conducting the study, which will address the families and will be aimed at
obtaining information about their level of education and the level of income
they have in order to create a relationship on the level link of income
education that directly affect the level of population consumption, therefore
the data will be collected through the questionnaire and the results that will
be collected will be grouped and analyzed a fact that directly and undirectly
affects the growth of the country’s economy.

think that the analysis of the data collected by the questionnaires will use
SPSS  (Statistical Package for the Social
Scientists) is a data management and statistical analysis tool which has a very
versatile data processing capability.

Electronic registration of the
questionnaire data

Data is stored in tabular form similar to
Microsoft Excel.

Generating routine descriptive statistical
data for question responses, such as closed question frequency numbers,
multiple choice answers, etc.

Receive graphical presentations of
questionnaire data for reporting

Finding relationships between answers to
different questions.



Literature Review

capital that includes human and institutional capital is the main source of
wealth of countries by increasing the weight in the total of wealth when countries
climb the stairs of development. The part that occupies the natural capital in
total wealth comes indecline in revenue growth, while the share of intangible
capital grows. Rich countries are such because of the capability of the
population and the quality of institutions supporting economic activity (World
Bank, 2011). In the MDGs and the Poverty Reduction Strategy, human capital is
considered one of the weapons to fight poverty.

concept of human capital has beginnings in the work of classics Petty, Smith,
and Marshall (quoted in Nesterova and Sabirianova, 1998). The capital stock of
a country includes the abilities of the inhabitants, because human skills
increase wealth for society and for the individual.

capital was the first element to raise individual salaries as compared to
factors others such as land, financial capital and labor force (Salamon, 1991).
According to Acemoglu (2011) it is important to distinguish between some forms alternative
/ complementary to the definition of human capital. Acemoglu (2011) classifies
in this way:

Human capital directly affects the production process thus increasing the
worker’s productivity in all the tasks that are being charged. Capital human
being is defined in a dimension: a stock of knowledge or abilities. One of the
obstacles faced is to distinguish between the impact they have on income earned
birth skills and education, because skills can not be observed. Years education
can be correlated with skills making the effect of years of education in salary
to be unclear. Another problem is testing the hypothesis that more years education
make an individual more productive. There may be social factors or signals of wrong,
that make people with more years of education, with more degrees, to higher
salaries are given despite the fact that these people are no longer productive (Bowles,
Gintis and Osborne, 2001). In this case the problem is not that the years of
education are unrelated to productivity, but also that productivity may not be be
linked to salary.

Kendrick (1976) concluded that human
capital has a positive effect on productivity. One way to explain this is that the
most educated people are the most skilled and motivated little educated people
and because of this they have higher returns from work. In the same line of
thought is the idea that education enables the firm to target more productive
individuals than to aim to increase productivity directly (Spence, 1973 and
Weiss, 1996).

Human capital does not directly affect the
company’s costs, and this is one of the qualities of human-faceted labor
(Kucharcikova, 2011). Based on the concept that employees themselves are not
human capital, but the knowledge, the skills they carry, constitute the
potential for them to return to human capital. This poses a separate challenge
as the firm can not be the owner of human capital, are only employees who are
owners of this type of capital. The View of resources is used to conceive
human capital as an asset of the company it creates added value. This view
suggests that a firm’s internal resources can be configured in such a way as to
be translated into competitive advantages (Wright, Snell and Dunford, 2001).

According to Koubek (2007), sources of a business
are the materials (such as machinery, equipment, energy), financial,
information and human resources. Part of one’s resources firms that can create
competitive advantages are also employee attributes either the human capital of
the firm. Human capital contributes to comparative advantages for so long meets
several criteria: employees should create value for the company; skills and
employee competencies should be rare and unique; the human capital of the firm
does not can be imitated; human capital can not be replaced by another source
of any other firm.

According to Kucharcikova (2011), human
capital is the factor that gives a particular character to the company.
Consequently, people create an element within the company, which promotes it to
innovation, stimulation, and generating the necessary changes. For Moreover,
human capital plays a decisive role in the long-term operation of the company
in the market.

Gardener’s: According to this view, human
capital should not be thought lying only in one dimension because there are
many dimensions or types of skills. A simple version of this view would
emphasize the difference between skills mental and physical. An individual can
be fit in a dimension or field but may not be fit in another area that requires
other types of skills.

Schultz / Nelson-Phelps: human capital is
seen as the ability to customized. According to this view, human capital is
particularly useful in situations of imbalance or situations where there is a
changing environment and workers need to fit. According to Schultz (1962), the
main source of productivity improvements over time has been the replacement of
physical assets and physical work with ideas,skills and knowledge. Equipping
with human capital requires resources that poor people do not have the
opportunity to find them. Politics and economic strategies condition the nature
of the demand for human capital. In societies where demand for skills and
knowledge is

low, it is likely that return from
education will be lower than in those where the demand is high.

Bowles-Gintis’s: Human Capital is the
Capability to Work on the organization, the ability to obey orders; short, the
ability to adapt to one hierarchical capitalist society.

Spence: Observable human capital meters
are more than onean indicator of skills rather than characteristics that are
needed in the process production.