Human capital is a set of knowledge, skills, and experience used to meet the diverse needs of individuals and society as a whole. In the broad sense, it is an intensive productive factor of economic development, including the educated part of the labor resources, knowledge, tools of intellectual and managerial work, and the environment of living and working. Capitalism with its urbanization, the first machines and equipment, and the corresponding increase in labor productivity have become an embodiment of the accelerated development of human capital, increasing its productivity through the new quality – intellectual power and new knowledge.
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It was creative, cultured, and educated people, professionals in their fields and industries, who made the industrial revolution. Scientific, innovative, industrial, and technological innovations accumulated by previous generations and by themselves as well as knowledge and competition lead them on their way to success. Investing in human capital is rather beneficial for the field of education as it promotes leadership and the growth of the national and global economy. At this point, the decentralized and egalitarian education proved to be more effective than the traditional one.
External Benefits of Education
One of the external benefits of education refers to financial advantages or public savings that include the summarized amount of funds from several industries affected by the level of education. For example, the situation with plenty of uneducated African-American males in the US promotes higher unemployment and crime rates, while the increase in their graduation level would address these challenges. As an example, one may mention the lower spending on health and crime prevention as well as taxes that are likely to improve public savings.
Therefore, the investment in African-American males’ education should be assigned a top economic priority. Along with economic benefits, one may emphasize social advantages that are to benefit the society in general and further generations. Among such benefits, it is possible to list the contribution to ensuring rights, eliminating poverty, making an environmental impact, or using the technology. The growing body of the research shows that there are both short- and long-term benefits, the former of which tend to be less stable and the latter seem to be more substantial that proves the great role of long-standing perspectives and investments in the field of education.
Education Contributions to Economic Growth
Speaking theoretically, education should contribute to the economic growth by producing the qualified workforce able to revolutionize the economic processes and outcomes. The existing evidence illustrates that the educational quality has a great potential to impact the economic growth due to the implementation of skills and knowledge by employees at their workplaces. In this regard, the policies concerning education need to be properly reconsidered and adjusted to the modern requirements and market trends. In addition to improving the situation with those who are uneducated, it is important to focus on educational institutions with low schooling levels and enhance them.
The mentioned solution to the given problem is likely to help in producing more contribution to the growth of economy by providing a more skilled staff. The quality of schools should be regarded as the most important issue linking education and economy, thus integrating them in an attempt to promote growth and develop the society. The upcoming reforms should target students’ performance and attendance of classes to make sure that they have a proper preparation for the future responsibilities and tasks at their workplaces, thus promoting the development of economy.