Human capital on economic growth (Article) - Group D

GROUP D

HUMAN CAPITAL

Human capital refers to the economic value of a worker's experience and skills. Human capital includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality. Human capital can be improved through education and training. This benefits the institutions of society and it benefits the economic development and growth of the entire economy. Investing in human capital increases economic output and an employee’s earning potential. 

Role of Human Capital in Economic growth

Human capital increases productivity of physical capital as specialised and skilled workers can handle machines or techniques better than the unskilled workers. This increased productivity and production leads to economic growth.

Human capital facilitates innovation of new methods and techniques of production and this increases the rate of economic growth in the form of an increase in GDP.

Human capital formation leads to a higher employment rate. With an increase in employment, productivity rises. Also, an increase in employment opportunities increases the level of income and this helps in reducing inequalities of wealth.

The process of human capital formation brings a positive outlook to the society which is different from orthodox and traditional ways of thinking, hence it increases the rate of participation in the workforce leading to an increase in the level of production and GDP.