what is the importance of skilled labor to the economy of a nation????
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Answer:
Since the 18th and 19th centuries, Adam Smith and Alfred Marshal respectively were concerned about the influence of investment in human capital on the wealth of nations. Similarly, recent experts as well as international organizations have been attracted by effects of labour force skills on nation’s growth performance. However, skills have a considerable importance as one of the major contribution made by human to increased economic growth and it is generally referred by literature as human capital. Furthermore, the contribution of people to economic growth depends on various factors including their skills, knowledge, competence etc. Consequently, quality of human capital is regarded as a crucial for high growth performance of a nation, in contrast, poor human capital, or unskilled labour constrains the growth performance (Hanushek & Woessmann 2009)
Empirical evidence suggests that skilled labour contributes to increasing productivity and output. In turn, productivity is a key source not only for increasing economic growth but also for improving standards of living of a nation. Additionally, quality human capital is a fundamental factor for attracting foreign investment. Thus, skills development systems include education, technical and vocational training, and life learning are central for sustainable productivity, and would result in creation of better jobs as well as increasing job opportunities in a country (ILO 2008).
Generally, most developing countries lack skilled labour, thus, their productivity level as well as growth performance is not sustainable. Therefore, they should adopt the strategy of skills development and learn from industrialized countries experience. In contrast, industrialized countries have better systems of skills development, thus, high growth performance. Moreover, skills development is vital for poverty reduction and exclusion since it promotes competitiveness and employability (ILO 2008).
The purpose of this paper is to provide an overview of relationship between skills and economic growth. In section two it provide definitions and measurement of skills. In section three discusses the empirical evidence, section four describes the importance of skills to economic growth and section five the relationship between skills and economic growth. Section six the brain drain and economic growth followed by the skills and growth performance in South Africa lastly conclusions.