How does investment in human capital contribute to growth?
Human capital and economic growth goes hand in hand. Human capital formation accelerates the economic growth whereas economic growth in turn facilitates human capital formation. The interrelationship between economic growth and human capital formation can be explained with the help of the below mentioned points.
1. Increase in the Productivity of Physical Capital: Physical capital refers to the stock of produced means of production. It consists of machines, production plants, tools and equipments. The skilled workers handle the productive assets in such a manner that these not only enhance their productivity and but also lead to an efficient utilisation of the physical capital. When the productivity increases, the pace of growth is automatically accelerated.
2. Innovation of Skills: An educated person is more productive and skillful. He has the potential to develop new skills and innovate new techniques that can be more efficient and productive. Greater the number of skilled and trained personnel, greater will be probabilities of innovations.
3. High Participation Rate and Equality: Human capital endowed with higher technical skills and innovating power is more productive and efficient. This increases the participation of more people in the process of economic growth and development. Higher the participation rate, higher is the degree of social and economic equality across the country. Thus, we can conclude that human capital and economic growth goes hand in hand. Human capital formation accelerates the economic growth whereas economic growth also facilitates human capital formation.
Match the following:
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1. Prime Minister 3. Quota 4. Land Reforms 5. HYV Seeds 6. Subsidy |
A. Seeds that give large proportion of output C. Chairperson of the planning commission D. The money value of all the final goods and services produced within the economy in one year. E. Improvements in the field of agriculture to increase its productivity F. The monetary assistance given by government for production activities. |
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Welcome to the NCERT Solutions for Class 11 Economics - Indian Economic Development - Chapter . This page offers a step-by-step solution to the specific question from Excercise 1 , Question 11: How does investment in human capital contribute to growth?....
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