Question

What is the role of education in economic development?

Answer 1

Answer:

Explanation:

Education in every sense is one of the fundamental factors of economic development. No country can achieve sustainable economic development without substantial investment in human capital. Education enriches people's understanding of themselves and world. It improves the quality of their lives and leads to broad social benefits to individuals and society. Education raises people's productivity and creativity and promotes entrepreneurship and technological advances. In addition it plays a very crucial role in securing economic and social progress and improving income distribution.

In fact, Economic development is a complex process and economists have had a difficult time identifying the fundamental factors. At its core this process is one in which financial and human capital are combined in ever more sophisticated and productive ways, and that is why certain countries advance in this process much more rapidly than others. Few centuries ago, Adam Smith identified, “the acquired abilities of all the inhabitants are a kind of capital,” what is now called “human capital,” as one of the four types of fixed capital that contribute to production in a national economy. Some economists began to wonder if poor countries might be poor because they lacked human capital. They deduced that rich countries devastated in World War II were able to quickly employ massive amounts of new physical capital, while the poorest countries seemed unable to successfully utilize even small amounts. They theorized that a nation’s capability to productively use physical capital is a function of its level of human capital and that if human capital does not increase along with physical capital, then economic development cannot proceed. In addition, it is notified that human capital is more likely to be the constraint to development because foreign investors are eager to invest in physical capital, but not in human capital.

Economists now accept that investment in education, or human capital, is an important element in the economic development process.