Question

Apart from raising labour productivity, human capital plays which additional role in an economy?

Options

• It substitutes entirely for the accumulation of physical capital

• It enables innovation and the adoption of new technologies

• It reduces the economy's requirement for skilled labour

• It eliminates the need for investment in health

Answer 1

Human capital's contribution extends beyond productivity: it enables innovation and the adoption of new technologies. These channels allow economies with educated, healthy workforces to upgrade production methods and sustain long-run growth.