explain the role of human capital formation in economic development
Answers
Answered by
41
Human capital and economic growth goes hand in hand. Human capital formation accelerates economic growth whereas economic growth in turn facilitates human capital formation. The interrelationship between economic growth and human capital formation can be explained with the help of below mentioned points.
Increase in the productivity of physical capital: Physical capital refers to the stock of produced means of production .It consists of machines, production plants, tools and equipments. The skilled workers handle the productive assets in such a manner that these not only enhance their productivity and but also lead to an efficient utilization of the physical capital. When the productivity increases, the pace of growth is automatically accelerated.
Innovation of skills: An educated person is more productive and skillful. He has the potential to develop new skills and innovate new techniques that can be more efficient and productive. Greater the number of skilled and trained personnel, greater will be probabilities of innovations.
High production rate and equality: Human capital endowed with higher technical skills and innovating power is more productive and efficient. This increase the participation of more people in the process of economic growth and development. Higher the participation rate, higher is the degree of social and economic equality across the country.
Thus, we can conclude that human capital and economic growth goes hand in hand. Human capital formation accelerates the economic growth whereas economic growth also facilitates human capital formation.
Increase in the productivity of physical capital: Physical capital refers to the stock of produced means of production .It consists of machines, production plants, tools and equipments. The skilled workers handle the productive assets in such a manner that these not only enhance their productivity and but also lead to an efficient utilization of the physical capital. When the productivity increases, the pace of growth is automatically accelerated.
Innovation of skills: An educated person is more productive and skillful. He has the potential to develop new skills and innovate new techniques that can be more efficient and productive. Greater the number of skilled and trained personnel, greater will be probabilities of innovations.
High production rate and equality: Human capital endowed with higher technical skills and innovating power is more productive and efficient. This increase the participation of more people in the process of economic growth and development. Higher the participation rate, higher is the degree of social and economic equality across the country.
Thus, we can conclude that human capital and economic growth goes hand in hand. Human capital formation accelerates the economic growth whereas economic growth also facilitates human capital formation.
Answered by
34
Human capital is believed to be positively related to economic growth though, it is difficult to establish a relation of cause and effect from the growth of human capital to economic growth, but we can see that human capital formation is related to economic growth in the following manner
(i) Higher Productivity’of Physical Capital Human capital increases productivity of physical capital as specialised and skilled workers can handle machines or techniques better than the unskilled workers, “increased productivity and hence production which leads to economic growth.
(ii) Innovative Skills Human capital facilitates innovation of new methods and techniques of production and this increase the rate of economic growth in the form of increase in GDP.
(iii) Higher Rate of Participation and Equality Human capital formation leads to a higher employment rate. With increase in employment, the productivity rises. Also, increase in employment opportunities also increases the level of income and this helps in reducing inequalities of wealth.
Both, increase in employment rate and decrease in income inequalities are pointers of economic development.
Hope it helps you.
(i) Higher Productivity’of Physical Capital Human capital increases productivity of physical capital as specialised and skilled workers can handle machines or techniques better than the unskilled workers, “increased productivity and hence production which leads to economic growth.
(ii) Innovative Skills Human capital facilitates innovation of new methods and techniques of production and this increase the rate of economic growth in the form of increase in GDP.
(iii) Higher Rate of Participation and Equality Human capital formation leads to a higher employment rate. With increase in employment, the productivity rises. Also, increase in employment opportunities also increases the level of income and this helps in reducing inequalities of wealth.
Both, increase in employment rate and decrease in income inequalities are pointers of economic development.
Hope it helps you.
Similar questions