8.1. Human Capital

8. INDUSTRY OVERVIEW 8.1. Human Capital Historically, the world economy has been viewed as being driven by an asset base of natural resources. This has shifted to an economy driven by industrial and financial resources. This perception is reinforced through the statistics and measurements used by governments, as seen in the Federal Reserve's representation of the U.S. balance sheet. However, it is KUE’s view that the real assets of a city, state, region or country are its people (human capital) and their productive capacity. KUE believes that national economies that fail to embrace this concept will be left behind. Nobel Prize winning economist Gary Becker estimates that in today’s service based economy, human capital accounts for 76% of the assets in the U.S. 2005 Human Capital - $238 Trillion Market 2005 U.S. Balance Sheet - $62 Trillion Market Other Francia © Other Tamale gq Human and US Financial Social Capital Assets 74% 26% Source: Gary Becker Source: U.S. Federal Reserve Importantly in today’s economy, the value of a company is increasingly driven by creativity, innovation and education. Companies are recognizing that human capital is their defining asset. With the value of education becoming apparent to government and businesses alike, the Principals believe that a significant opportunity exists to create an education company that will promote and cultivate human capital. Today, not a single education company ranks in the top 100 worldwide as measured by market capitalization. Within 20 years, KUE believes that the education space will contain some of the largest companies in the world. 8.1.1. Enhancing Human Capital through Education Education is a primary factor in improving an individual’s life-long productivity. Studies have shown that a higher level of education leads to increased lifetime earnings, and that this is increasingly true in the new, knowledge economy. 61 HOUSE_OVERSIGHT_024494