importance of human capital to economic growth

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How important are education and other aspects of human capital to economic growth? Many theories and research papers have shown that human capital plays an important part in economic growth. Economic growth depends on many factors such as the quantity and quality of education, how education can impact on fertility rate, government policies to sustain incentives for human capital, a reduction in the cost of technology adoption and increase expenditure on education. Neoclassical growth model, endogenous growth theory and the growth accounting theory are discussed below to shows the relationship between human capital and economic growth. Education and other aspects of human capital is important to economic growth because more educated individuals tend to have higher employment rate and earnings and produce more output relative to those who are less educated. Education is considered as a positive investment that allows individuals to be equipped with knowledge and skills that can improve their employability and productive capacities that would lead to higher earnings in the future and hence, economic growth. Economic growth refers to the increase in the amount of the goods and services produced by an economy over time (Jones, 1996). It increases the nation’s capacity to produce goods and services. It also creates extra jobs and lifts the living standards of a country through higher income levels. Many studies such as the endogenous growth, neoclassical and the accounting-growth theories have shown that education and other aspects of human capital increase the wealth and power of countries. Human capital deals with individuals who gain skills and knowledge as a result of education at school, training and experience in the labour market (Barro et al, 2000). As a result of their skills and education, productivity level would increase because educated
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