Japan and Germany were totally destroyed during the Second World War. Their industrial complexes lay in ruins after the devastating Allied air bombardments. Both countries emerged from the war under Allied occupation and with almost all of their manufacturing facilities and infrastructures, such as transportation and telecommunications, paralyzed. A picture of war-ravaged Japan appeared in the Nippon Times of 23 September 1946:
- In Tokyo, 70 percent of the area of the city was destroyed, in Osaka 80, in Nagoya 90. Transportation was limited to crowded, creaky trains, hand-pulled two-wheel 'rear cam' designed to be attached to bicycles and ox carts. At war's end, in all of Japan there were only 41,000 motor vehicles, half of them inoperable and almost all the rest powered by charcoal fumes. There were no street lights at night and very few house lights.
Germany's infrastructure suffered a similar fate:
- The condition of Germany at the end of World War I1 was desperate. The country seemed to be one vast rubble dump. The economy was in ruins; factories, railroads, ports, and canals had been destroyed; and many millions had-lost their homes. Many factories that had escaped destruction were being dismantled for reparation payments. (Colliers Encyclopedia 1986)
The only resource that these two countries still had was their people. Through effective use, within thirty years they became strong competitors of their erstwhile occupiers. Their example shows that human resources play a major part in the process of national development. Empirical research shows that both aggregate productivity and economic growth increase along with the development of indigenous human resources. Denison (1985) indicates that between 1929 and 1982,73 percent of economic growth in the United States was due to human resource development. He adds that physical capital added only 17 percent, while land improvement added zero percent to long-term economic growth. Carnevale (1983) reports that “seventy-five percent of the improvement in productivity in the U.S. since 1929 can be attributed to human resource development activities such as on-the-job training, education, formal training and health.’’
In an emerging global economy, human resource development has assumed greater importance. Factors of production, such as money, factories, equipment, and technology can be moved easily from one country to another. Only human resources are relatively immobile. A nation’s economic competitiveness depends upon the quality of this factor. With reference to the current economic problems of the United States and other countries, Reich (1991) expresses the following opinion:
The real economic challenge facing the United States in the yeas ahead-the same as facing every other nation-is to increase the potential value of what its citizens can add to the global economy, by enhancing their skills and capacities, and by improving their means of linking those skills and capacities to the world market.
The relevance of human resource development to economic growth only emerged as an important economic school of thought after the Second World War. Islam, however, emphasized the importance of this factor fourteen hundred years ago. At the present time, Muslim countries have abundant human resources. Their combined population is more than one billion. Unfortunately this resource remains undeveloped. “The present-day Muslim socioeconomic environment is such that it is unable to motivate people to render their best either in their own interest or in the interest of the society,” writes Chapra (1988). Thus many Muslim countries, in spite of their huge human and material wealth, are forced to import goods-such as breakfast cereals-from non-Muslim countries.
Almost all Muslim countries depend on non-Muslim nations for their defense equipment, a development that has led them to be blackmailed and often humiliated. The development of indigenous human resources could put them on the world map as industrially advanced countries able to manufacture every item needed for both consumption and defense.
Human resource development requires action at both the macro- and microlevels. At the macrolevel, governments must provide infrastructures conducive to the development of this resource-the building of schools and universities, for example. Fiscal policies would have to be designed to channel resources to this end. Capital markets should be developed, for they would accelerate the growth rate of human capital (Levine 199 1). At the microlevel, firms have to implement strategies, plans, policies, and practices designed to develop their employees’ intellectual and technical skills and thereby improve their productivity and quality consciousness.
This paper will investigate various personnel- and production-related decisions made at the firm level in the light of Islamic teachings. It will also discuss the efficacy of these decisions vis-a-vis the development of human resources by Muslim nations seeking economic advancement. Before discussing the formulation of corporate strategies and policies, however, we must understand what is meant by the term ”economic development,” first as currently defined and then as defined from the Islamic viewpoint. In addition, similarities and differences in the two contexts should be explored. Based on this analysis, a case can be made for adopting and/or modifying current western-global strategies and, if necessary, designing entirely new techniques for human resource development.