How does investment in human capital contribute to economic growth?
How does investment in human capital contribute to economic growth?
The contribution of human capital to economic growth can be described as follows:
(a) Progress in Labour Productivity Investment in human capital through investment in education, health, etc, improves the productivity of labour as they become fit and skilful in their jobs. It leads to efficient utilisation of the material inputs and capital. With the increase in productivity, output advances at an accelerating rate and as a result, the economic growth quickens.
(b) Innovations Research and development are necessary for innovations in an economy because it leads to the advancement of technology and the production of new products. The human capital organisation helps in developing educated scientists and researchers in various subjects who bring out innovative products, technologies and processes and thus add to the economic growth.
(c) Absorptive Capacity Advanced technology can be chosen only if the skills and knowledge needed for using that technology are available in the country. Investment In education and on the job training helps to build these skills and knowledge base and thus helps in the assimilation of new technologies which lead to higher production and thus economic growth.
Thus, from the above points, it is obvious that human capital contributes to economic growth in various ways.
The contribution of human capital to economic growth can be described as follows:
(a) Progress in Labour Productivity Investment in human capital through investment in education, health, etc, improves the productivity of labour as they become fit and skilful in their jobs. It leads to efficient utilisation of the material inputs and capital. With the increase in productivity, output advances at an accelerating rate and as a result, the economic growth quickens.
(b) Innovations Research and development are necessary for innovations in an economy because it leads to the advancement of technology and the production of new products. The human capital organisation helps in developing educated scientists and researchers in various subjects who bring out innovative products, technologies and processes and thus add to the economic growth.
(c) Absorptive Capacity Advanced technology can be chosen only if the skills and knowledge needed for using that technology are available in the country. Investment In education and on the job training helps to build these skills and knowledge base and thus helps in the assimilation of new technologies which lead to higher production and thus economic growth.
Thus, from the above points, it is obvious that human capital contributes to economic growth in various ways.
