Human Capital Dr Shahram Yazdani Shahid Beheshti University

Human Capital Dr. Shahram Yazdani Shahid Beheshti University of Medical Sciences School of Medical Education Strategic Policy Sessions: 14

Our Capitals Intellectual Capital Social Capital Human Capital Financial and Physical Capital Natural Capital Dr. Shahram Yazdani

Iran is a resource-rich country n n The fifth largest oil reserves in the world (about 90 billion barrels) The second largest gas reserves (about 23 trillion cubic meters). Dr. Shahram Yazdani

Crude Oil Reserves, Production and R/P Reserves Billion Barrel Share in World Total Production 1, 000 B/D Share in World Total Recoverable Years North America 63. 7 6. 2 13, 700 19. 1 18. 8 Latin America 89. 5 8. 7 6, 690 9. 3 37. 7 Europe 20. 6 2. 0 6, 975 9. 7 8. 3 Russia 48. 6 4. 7 6, 180 8. 6 21. 8 Iran 89. 7 8. 7 3, 550 4. 9 69. 9 Iraq 112. 5 10. 9 2, 580 3. 6 119. 5 Kuwait 96. 5 9. 3 2, 025 2. 8 130. 6 Saudi Arabia 263. 5 25. 5 8, 595 12. 0 87. 5 Dr. Shahram Yazdani

Natural Gas Reserves, Production and R/P Reserves TCM Share in World Total Production BCM/D Share in World Total Recoverable Years North America 7. 3 5. 0 740 31. 8 9. 9 Latin America 6. 3 4. 3 95 4. 1 66. 2 Europe 5. 1 3. 5 282 12. 1 18. 2 Russia 48. 1 32. 9 551 23. 7 87. 4 Iran 23. 0 15. 7 52 2. 3 438. 1 Iraq 3. 1 2. 1 0 0 ----- Qatar 8. 5 5. 8 24 1 353. 8 Saudi Arabia 5. 8 4. 0 46 2 125. 3 Dr. Shahram Yazdani

Economic growth rates by country group, 1980– 98 Countries that grew in GDP per capita Average annual growth in GDP per capita (%) Technology innovators 18 out of 18 1. 7 Transition countries 4 out of 12 – 1. 7 Fuel exporters 2 out of 13 – 1. 5 Manufacturing exporters 23 out of 24 2. 7 Commodity exporters 29 out of 61 – 0. 1 Dr. Shahram Yazdani

Percent of Total Exports Primary Products 91 Manufactured Goods 9 Egypt 62 38 Turkey 25 75 Morocco 65 35 Tunisia 22 78 Iran Dr. Shahram Yazdani

A quick look at OPEC • • Nigeria has been stagnant since independence in 1960: No growth Per capita growth 1965 -1998 • • Dr. Shahram Yazdani • Iran and Venezuela: -1% per year Libya: -2% Iraq and Kuwait: -3% Qatar: -6% Why?

Is OPEC an exception? No, this seems to be a general pattern. Of 65 natural resource abundant countries 1970 -1998, only four had üInvestment of more than 25% of GDP üPer capita GNP growth of more than 4% per year Dr. Shahram Yazdani They are: Botswana, Indonesia, Malaysia, Thailand

Economic growth and natural capital A ten percentage point increase in the natural capital share goes along with a decrease in per capita growth by 1% per year. Dr. Shahram Yazdani 85 countries r = -0. 64

Openness and natural capital A ten percentage point increase in the natural capital share goes along with a decrease in openness by 4% of GDP. Dr. Shahram Yazdani r = -0. 33 91 countries

Corruption and natural capital A ten percentage point increase in the natural capital share goes along with an increase in corruption by 1. 3 points. l a t i p a c al ut r tu s o tal a N wd api cro ial c c o s Dr. Shahram Yazdani 60 countries r = -0. 52

Expenditure on education and natural capital An 18 percentage point increase in the natural capital share is associated with a decrease in public expenditure on education by 1% of GNP. Dr. Shahram Yazdani l a it p a c l a t l r u u o a t s t a i N wd cap o r c man hu 90 countries r = -0. 32

Secondary enrolment and natural capital A five percentage point increase in the natural capital share goes along with a decrease in secondary-school enrolment by almost 10 percentage points. Dr. Shahram Yazdani 91 countries r = -0. 66

Economic growth and education A 30 point increase in the secondary enrolment rate goes along with an increase in per capita growth by 1% per year. Dr. Shahram Yazdani s th i n ow o i at r gr sa c u fo er d E d ev o ic o g v d an 87 countries r = 0. 69

Summary of results on education Growth Education = + Resources Growth Education Resources Dr. Shahram Yazdani

Investment and natural capital A ten point increase in the natural capital share goes along with a decrease in investment by 2% of GDP. l a pit Dr. Shahram Yazdani a c l a t tal r u u t s o api a N wd l c o r c ysica ph 85 countries r = -0. 38

Economic growth and investment A five point increase in investment share goes along with an increase in per capita growth by 1%. Dr. Shahram Yazdani s i nt wth e tm gro a s e or s v r n f e I d ev o ic o g v d an 85 countries r = 0. 65

Summary of results on investment Growth Investment = + Resources Growth Investment Resources Dr. Shahram Yazdani

Shares of wealth by income group Intangible capital is the largest share of wealth Natural capital share declines with income In the poorest countries, natural capital is more important than produced capital Dr. Shahram Yazdani 20

The value of natural capital per capita rises with income Development does not automatically lead to depletion of environment Dr. Shahram Yazdani 21

Dr. Shahram Yazdani

Relationship Between Human Capital and GDP n The average number of years of study is a major factor in human capital. n 1 year of college for all workers led to a direct rise of about 7% in GDP. Dr. Shahram Yazdani

Education Level is Closely Associated with Increased Earnings Dr. Shahram Yazdani High School Dropout High School Diploma Bachelor’s Degree Master’s Degree Doctorate Degree Professional $20, 000/year $30, 000/year $50, 000/year $60, 000/year $78, 000/year $93, 000/year Average Earnings, U. S. , Age 25 & Older, Full-time Employment, 2000. Source: U. S. Department of Commerce, Bureau of the Census, 2001.

Education & Lifestyle An individual with a bachelor’s degree, on average, will earn about 2 ½ times that of a high school dropout. Dr. Shahram Yazdani

HS Dropout/College Grad Economic Comparison Dropout Annual Earnings $ 20, 000 Lifetime Earnings $800, 000 Total Fed. Taxes* $ 80, 000 Total Earning Minus Taxes $720, 000 Dr. Shahram Yazdani * Over 40 years work life Graduate $50, 000 $2, 000 $400, 000 $1, 600, 000

More Education Means a Better Economy The highly educated earner spends and contributes significantly more to the economy than does the lesseducated earner. Dr. Shahram Yazdani

Spending $$$ on Education Reduces Crime* § Dr. Shahram Yazdani A significant part of lower incarceration rates results from the higher wages that high school graduates earn as compared to high school dropouts § A 1% increase in the high school graduation rate would save the U. S. as much as $1. 4 billion per year in reduced crime costs and would result in $1, 170 to $2, 100 per additional high school graduate *Lochner, L. and Moretti, E. “The effect of education on crime: Evidence from prison inmates, arrests, and self-reports” 2001 Joint Center for Poverty Research, Policy Brief, vol. 4; no. 5, p. 26.

Education Increases a Community’s Quality of Life • • • Voting frequency Health insurance Volunteerism Charitable contributions Leisure activities • • Cultural activities Childbirth inside or before marriage Prenatal care Crime victimization Dr. Shahram Yazdani

Voting Behavior By Educational Attainment 1 -3 years 4 years High School US Congress 1974 1994 Presidential 1964 Dr. Shahram Yazdani 1984 1992 25% 13% 61% 29% 27% High School 42% 31% 76% 49% 50% 4 years College ++ 59% 57% 86% 75% 79%

Health Insurance & Education, cont. In 1999 those who had a college degree or higher were 300% more likely to have health insurance as compared with those who did not have a high school diploma. Dr. Shahram Yazdani

People Without Health Insurance by Education Level, 1999 Dr. Shahram Yazdani W/O Health Insurance No HS Diploma 27% HS Graduate 18% Some College 15% AA Degree 13% Bachelors or Above 8% Source: U. S. Census Bureau, Current Population Survey, March 2000.

Education & Health • Current research is finding biological proof of education’s possible protective effect on a person’s health • • Dr. Shahram Yazdani A recent study finds a correlation between the more years of formal education & the less likely individuals were to exhibit Alzheimer’s disease symptoms of dementia People with 22 year of formal education, showed less effects of the disease while living & the disease had less effect on their cognitive test scores

Volunteers & Education • 2/3 of the college graduate population performed some sort of volunteer work during a year compared with somewhere between 30% and 43% of high school drop outs Dr. Shahram Yazdani

Percent of Adult Population Doing Volunteer Work, 1998 % of Population Volunteering Elementary School 30% Some High School 43% HS Graduate 43% Trade, Technical, Business School Grad 54% College Graduate 68% Average # Hours/Week --3. 9 Hours 2. 8 Hours 3. 5 Hours 3. 1 Hours Dr. Shahram Yazdani Source: Saxon-Harrold, Susan K. E. , Murray Weitzman, and the Gallup Organization, Inc. Giving and Volunteering in the United States: 1999 Edition. (Copyright and published by INDEPENDENT SECTOR, Washington, D. C. , 2000.

Charitable Contributions & Education Persons with lower levels of income tend to donate fewer total dollars but a larger percentage of their incomes to charities. Dr. Shahram Yazdani

Charitable Contributions by Household Income, 1998 Household Income All Contributing Households Average $$$$ Dr. Shahram Yazdani Under $10, 000 $ 10, 000 – 19, 999 $ 20, 000 – 29, 999 $ 40, 000 – 49, 999 $ 75, 000 – 99, 999 $100, 000 & up 329 495 552 951 1394 2550 % of Household Income 5. 2% 3. 3% 2. 2% 2. 1% 2. 6% 2. 2%

Charitable Contributions, 1998 % of Type of Charity Households Dr. Shahram Yazdani Arts, Culture Education Environment Health Human Services Public, Social Benefit Youth Development 11. 4% 12. 6% 12. 4% 20. 8% 27. 3% 11. 1% 21. 4% Average $$$ Contribution $221 $382 $194 $234 $250 $134 $174

% of Participation in Leisure Activities by Education, 1997 Education Level Attendance/Participation Movies Sports Exercise Dr. Shahram Yazdani Grade School Some HS HS Graduate Some College Graduate 14% 52% 25% 62% 38% 78% 82% 59% Home Improvem’t 13% 46% 40% 66% 59% 74% 65% 48% 81% 71% 87% 76% Source: U. S. National Endowment for the Arts, 1997 Survey of Public Participation in the Arts, Research Division Report No. 39, December 1998.

Cultural Events Attendance & Education Level, 1997 Attendance at least once in past 12 months Music Dr. Shahram Yazdani Grade School 2% Some HS 3% HS Graduate 7% College Grad 21% Grad. School 28% Opera Theatre --2% 2% 10% 14% 3% 7% 9% 28% 37% Art Museum 6% 14% 25% 58% 70% Source: U. S. National Endowment for the Arts, 1997 Survey of Public Participation in the Arts, Research Division Report No. 39, 1998.

Child Bearing & Education • • Almost 2/3 of first births for high school dropouts were premarital Fewer than 10% of first births before marriage for those with a college degree or higher Dr. Shahram Yazdani

Childbearing Statistics Have Large Economic Implications § § § Two-parent families form more stable environments to raise children They have more money & other resources to meet their children’s and own personal, health, social, & educational needs They are more likely to raise children who § § Dr. Shahram Yazdani § § § value education have fewer special learning needs develop good work habits prepare for well-paying careers contribute to their community

Prenatal Care & Mother’s Education, 1991 -1995 Education Level Dr. Shahram Yazdani No HS Diploma/GED Some College BA Degree or Higher Months Pregnant When Starting Care Less than 3 -4 Months 5 Months + 3 Months or No Care 79% 7% 14% 89% 6% 5% 95% 3% 3% 94% 2% 4% Source: U. S. National Center for Health Statistics, Fertility, Family Planning, and Women’s Health: New Data From the 1995 National Survey of Family Growth, Vital and Health Statistics, Series 23, No. 19, 1997.

Crime Victim Status & Education • • For those making $60, 000/year (the average salary for an individual with a Masters degree) about 1/3 are victims of a crime For high school dropouts in the lowest income categories, between 1/2 almost 2/3 are crime victims Dr. Shahram Yazdani

Thank You ! Any Question ?

Crime Victimization by Family Income (Education) Income Rate per 1000 persons, age 12 and up All Crimes Robbery Assault Theft Less than $7500 – 14, 999 $15, 000 -24, 999 $25, 000 -34, 999 Dr. Shahram Yazdani $50, 000 -74, 999 $75, 000 & above 66% 51% 43% 34% 6. 6% 5. 8% 3. 6% 6. 9% 2. 8% 2. 9% 54% 41% 34% 28. 5% 29% 1. 7% 1. 8% 1. 3% 1. 6% 1. 1% 1. 0% Source: U. S. Bureau of Justice Statistics, Criminal Victimization, Annual; and Criminal Victimization 1998, Changes 1997 -98 With Trends 1993 -98, Series NCJ-176353 (Revised 25 August 1999).

Iran: Wealth estimates ($ per capita) Per capita values Iran Middle East & North Africa Lower middle income countries Oil producing countries 70 242 2198 536 33324 29405 22082 45413 Intangible Capital 1505 8215 9444 3363 Produced Capital 10516 7107 5885 11217 Natural Capital – of which: 24313 14083 6754 30833 Oil 17088 8099 1476 19305 Natural Gas 4213 3292 567 5880 Coal 11 3 453 239 Minerals 91 53 142 333 Crop 1481 1452 2628 1358 Pasture Land 1042 840 443 852 Forest – Timber 27 95 497 266 Forest – NTFP 93 57 196 1077 Protected Areas 267 190 353 1523 Natural Capital (%) 73% 48% 31% 68% Produced Capital (%) 32% 24% 27% 25% Intangible Capital (%) -5% 28% 43% 7% Population (millions) Total Wealth Dr. Shahram Yazdani Shares of total wealth 47