Question

Explain how does ‘Investment in Human Capital’ contributes to the growth of an economy.

Answer 1

An increase in investment in Human Capital Formation helps in raising economic growth in the following ways:

1. An educated person contributes more to economic growth than an uneducated person because education improves skills and efficiency. It also changes a person’s outlook and makes the workforce more capable of adopting new technologies easily. This increases production and leads to a higher rate of economic growth.
2. Investment in health ensures that workers remain healthy and able to work for longer. A sick person is often absent from work, reducing productivity. On the other hand, a healthy worker contributes more effectively to production, resulting in higher economic growth.