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South African is faced with a high unemployment rate; however, the country’s manufacturing sector is one of the sectors that have been linked with job creation. Nevertheless, the growth in manufacturing production may not increase employment opportunities if this sector continues to shift to technology-intensive methods of production, which displace labour. This study uses a vector autoregressive (VAR) model to estimate the interaction between manufacturing production and the employment rate in South Africa from 1970 to 2013. Results revealed that both variables were stationary at the first difference and there was a long-term equilibrium relationship between the variables. In the short term, a significant positive relationship between manufacturing production and employment rate was observed. Granger causality test showed that there is a causal link from manufacturing production to the employment rate. A comparison between apartheid and post-apartheid periods showed the long-run relationship only existed in the post-apartheid period of a more open economy. Findings of this study revealed that a growth in the South African manufacturing sector is linked with employment opportunities in the short-run. However, these opportunities may be reduced by changes in technology which promote capital intensive production. As such, policy-makers should encourage policies that promote a mix of labour and capital intensive production in order to maintain these employment opportunities in the manufacturing sector.
South African is faced with a high unemployment rate; however, the country’s manufacturing sector is one of the sectors that have been linked with job creation. Nevertheless, the growth in manufacturing production may not increase employment opportunities if this sector continues to shift to technology-intensive methods of production, which displace labour. This study uses a vector autoregressive (VAR) model to estimate the interaction between manufacturing production and the employment rate in South Africa from 1970 to 2013. Results revealed that both variables were stationary at the first difference and there was a long-term equilibrium relationship between the variables. In the short term, a significant positive relationship between manufacturing production and employment rate was observed. Granger causality test showed that there is a causal link from manufacturing production to the employment rate. A comparison between apartheid and post-apartheid periods showed the long-run relationship only existed in the post-apartheid period of a more open economy. Findings of this study revealed that a growth in the South African manufacturing sector is linked with employment opportunities in the short-run. However, these opportunities may be reduced by changes in technology which promote capital intensive production. As such, policy-makers should encourage policies that promote a mix of labour and capital intensive production in order to maintain these employment opportunities in the manufacturing sector.
According to human capital theory the higher education is considered as an investment decision. In order to be beneficial from economic point of view and in comparison with other investment opportunities, investment in education should give a higher rate of return on investment. Knowledge about the return on investment can help to make competent decisions, which would have an economic benefit in the future. Evaluating the investment in human capital (education) as an individual decision, since the vast majority of individuals for gained education should pay themselves and only a part of the price shall be covered by the state, the rate of return on investment becomes an increasingly important evaluation criterion. Making an investment decision it is very important to allocate resources properly. For the individual the costs of this investment include poor wages and direct costs. It can be assumed that individuals with higher education will be paid more than the others without education. Thus, the investment in higher education (human capital) is useful as long as there is a positive difference between marginal benefit and marginal costs. Higher education is a guarantee of a higher life quality. But, in order to ensure the higher life quality, such main factors as individual skills and labour productivity should be eximined. Investment in human and physical capital doesn't only promote the growth of labour market. The investment such as lower inflation rates and freer trade (lower limits) also stimulates the economic growth. The ability to absorb easily technological change increases labour productivity and efficiency. Education, lifelong learning and health are very important investment in human capital. The foreign scientists performed researches and proved that income growth of individuals depends on the level or degree of education the individual has gained. Rate of return on investment in human capital is positive even after direct and indirect costs estimation. The individuals with higher education have higher incomes in comparison with individuals with college education. Education is one of the most important development factors of the modern knowledge based economy. However, educational and scientific development requires the long-term and huge investment. This investment also should be assessed from the social aspect. On the one hand investment in human capital should be stimulated; on the other aspect it should assess their effectiveness. As the investment in human capital is a complex problem from both practical and scientific aspect, so the practice of such evaluation and applied methods do not give an unambiguous answer. It is very important to evaluate the effectiveness of this investment, to estimate the detention of the time, the money flows: incomes (revenues) and outcomes (expenditures).Keywords: human capital, investment in human capital, rate of return on investment, internal rate of return (IRR), shortperiod return on revenue.
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