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Building Human Capital for Economic Development
Keynote Speech at the World Bank's Annual Bank Conference on Developmental Economics, 2003
Azim Premji, Chairman, Wipro Corporation

Ladies & Gentlemen,

It is my pleasure to be here with all of you in this Annual Bank Conference on Development Economics. I thank the World Bank for this opportunity.

My view is that the world in general and India in particular are at a very critical phase of development that has a potential to determine the way things are going to shape in the next 70 years.

It was Adam Smith who is regarded as father of Economics who said that the proportion of national produce must in every nation be regulated by two different circumstances; first, by the skill, dexterity, and judgment with which its labour is generally applied; and secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed.

Today, the world is far more developed than the days of Adam Smith. But the fundamental principles of economic development have remained the same. The key differentiator between rich and poor countries remains their ability to unleash the people power and invest it in the economic activity as human capital.

The difference in composition of wealth in these groups of nations clearly brings this out. 75 percent of national wealth of Western Europe is in the form of its human resources, 23 percent in the form of industrial produce and 2 percent in the form of natural resources. For West Africa, the same percentages are 60, 19 and 21.

Clearly all the economies which have prospered in the last century have done so due to their ability to tap the human potential. Economic theories of growth have captured this idea adequately in the last two decades. Endogenous Growth Theory developed by Nobel Laureate Robert Lucas and Paul Romer in late 1980's, often called as "New Growth Theory", clearly established that, the growth cannot come from the serendipities of technological innovations. But it is driven by systematic social choices. These choices primarily include the investment in technological change and human capital enhancing activities like education and healthcare. Hence it goes without saying that if we have to accelerate the economic development we have to carefully look at these social choices and ensure that especially the developing societies make progressive choices.

Human development is about people, about expanding their choices to lead lives they value. Fundamental to enlarging human choices is building human capabilities: the range of things that people can do or be. Human Development is certainly a broader and primary goal than mere economic development. That is why we measure development in refined manner such as Human Development Index instead of mere average national income. This enables us to include important features such as longevity and knowledge in the development framework along with the level of economic well-being.

So the all important question, even more important than the economic development itself is, whether human development in a given geography is improving or not?

While there has been clear progress in some areas the frightening issue is continuing disparity between the developed and underdeveloped countries. A girl born in Japan today may have a 50 percent chance of seeing the 22nd century - while a newborn in Afghanistan has a 1 in 4 chance of dying before age 5. And the richest 5 percent of the world's people have incomes 114 times those of the poorest 5 percent. In Sub-Saharan Africa human development has actually regressed in recent years, and the lives of its very poor people are getting worse. The share of people living on $1 a day at 47% in early nineties remains the same at the end of the decade.

Turning to India, the scenario is surely encouraging. We always believed that India was rich with culture, values and people power. We have now been acknowledged by the world as a store house of talent - primarily due to the IT and leadership talent that India contributed to the world particularly in the last two decades. The question is how do we build talent for our overall development?

How do we create a sense of accountability to deliver commitments to electorate, to customers, to children, to our next generation and to the normal honest, law abiding citizen of this country? How do we reach the global standards of excellence in quality, productivity and efficiency in the shortest possible time cycle? How do we spread and transfer the best practices of some of the corporate organisations to public life to reach every aspect of life?

From our experience in Wipro, we believe that achieving the above needs meticulous planning, will power, commitment of the highest offices and consistent pursuance of a people development approach.

If you consider Wipro is a reasonably successful organisation and ask me the reasons for this success, without doubt my answer will be "our people". What did we do to develop people in a strategic manner?

To start with, as a leader of the organisation I personally made a commitment way back in 1969 that we would develop leadership by recruiting people from management campuses. We were among the first Indian companies to do so. The only thing we were looking for in the people we recruited was their culture, values and openness to learn.

Next, when it was not a fashion to speak of beliefs and values, we evolved our organisation Beliefs in 1972, articulated them to the rank and file in the organisation and most importantly, we practised them almost fanatically. We soon found that the talent we recruited in the organisation immensely enjoyed working in a value based organisation that stood out and even made sacrifices for its values.

To nurture the young talent in the organisation, there were number actions that were necessary. We gave people huge responsibilities early in life, trusted them fully, allowed them to make mistakes, promoted an absolutely professional, open and informal work environment and even compromised on short term results as long as people exhibited potential to develop. We were the first organisation in the country to launch Stock Options as early as in 1983. Our phenomenal growth in sales, profits and businesses excited people to continue to deliver their best and developed in them the pride of working with a high performing organisation. They had to cope with the intellectual challenges that brought out the best in them. We had to obviously match the business growth with best of the people practices, newer approaches to people learning and development and promote a globally competitive work environment that increased the propensity of the employees to choose Wipro over others.

My sincere belief is that development and deployment of right talent in public and private services can soon reach India to that long awaited status of being a "developed economy".

Both Wipro and Azim Premji Foundation have a single minded focus in significantly enhancing the quality of learning in Elementary Schools in India. We are working in partnership with the Government and our experience has been highly encouraging.

We work with the Government of Karnataka and Andhra Pradesh bureaucrats and politicians who exhibit maturity and indepth understanding of the relevant issues in education. The talent that exists in the Government is enormous and is as competitive - if not better - as found in corporate organisations.

We however, find an enormous need to develop top class talent at the grass root level who have world class capability to deliver the final results. There is also a need to bring out administrative reforms that promote professional, meritocracy based people processes that develop the final accountability towards end user or end customers.

The reason we decided to focus on Elementary Education was that we felt a sound Elementary Education with high quality learning could form a solid foundation for development of India.

Often whenever the discussion on education begins in policy circles, the focus is on budgetary provisions, the need to allocate certain percentage of GDP on education. I am not denying the importance of financial resources in education. But based on whatever experience we have so far, we have realized that the key challenge is developing competent teachers and education functionaries who consider "learning by the children" as number one priority in their life.

This problem is unlikely to be solved by merely allocating more money. What it requires is more focussed efforts and imagination. If we have to make major headways in the area, we have to stop thinking in terms of better school buildings and start thinking in terms of passionate, highly motivated and more importantly, highly competent teachers and head teachers. We have to think of the economic scenario that awaits us 50 years hence and the kind of talent we require to meet that scenario successfully. We need to visualize the qualities and attributes of the person we want at the end of education. We need to enrich our curriculum to incorporate those attributes and competencies that are absent in the current curriculum. We need to evolve assessment and evaluation methods that can help us identify whether the desired attributes have been developed. In addition to the assessment oriented evaluation, we also need development oriented evaluation. We are actively working with the Government to bring out the concept of providing "Learning Guarantee" in the schools. If we have to achieve human development on a continuous basis, what we need is a continuously learning individual, a continuously learning nation and a continuously learning world.

Most business people in the world will realise that the material investments made by them will depreciate over time and will have to be written off. Only one kind of investment will keep appreciating irrespective of interest rate in the economy in all sorts of economic climates -- that is the investment in human capital.

In India, we have "islands of excellence" in institutions and corporate organisations have achieved top class standards. The challenge before us is to develop human capital at the grass root level deployable in a globalized economy. To develop people at every level who interface with the common citizens and deliver the services and products to them.

Investments made in Education and human developments have cascading, long-term benefits. I remember reading a story which brought this out in a touching manner.

The story is about a poor Scottish farmer named Fleming. One day, while trying to make a living for his family, he heard a cry for help coming from a nearby bog. He dropped his tools and ran to the bog. There, mired to his waist in black muck, was a terrified boy, screaming and struggling to free himself. Farmer Fleming saved the boy from what could have been a slow and terrifying death. The next day, a fancy carriage pulled up to the Scotsman's sparse surroundings. An elegantly dressed nobleman stepped out and introduced himself as the father of the boy Farmer Fleming had saved.

"I want to repay you, " said the nobleman. "You saved my son's life." "No, I can't accept payment for what I did," the Scottish farmer replied, waving off the offer. At that moment the farmer's own son came to the door of the hovel.

"Is that your son?" the nobleman asked. "Yes," the farmer replied proudly.

"I'll make you a deal. Let me take him and give him a good education. If he's anything like his father, he'll grow to a man you can be proud of." And that he did. In time, Farmer Fleming's son graduated from St. Mary's Hospital Medical School in London, and went on to become known throughout the world as the noted Sir Alexander Fleming, the discoverer of Penicillin. Years afterward, the nobleman's son was stricken with pneumonia. What saved him?
Penicillin.
This is not the end. The nobleman's son also made a great contribution to society. For the nobleman was none other than Lord Randolph Churchill. And his son's name was Winston Churchill.

This is the only way for accelerating economic growth and development for the entire world economy!

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