How does investment in human capital contribute to growth Economics CBSE class 11 ncert

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How does investment in human capital contribute to growth? -Economics CBSE class 11 ncert

Book: Indian Economic Development
Chapter 5: Human Capital Formation in India
(NCERT textbook questions)


Asked by:Aparna-Dasgupta

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Investment in human capital plays a vital role in economic growth in the following ways:
 
Development of skills: Education plays an important role in improving skills which are required to enhance the productivity level. It helps develop skills and imparts training to increase production. It facilitates the use of innovative ideas and the ability to adapt to changes in science and technology. Thus, the use of skilled workers in production paved the way towards sustainable economic development.
Increase in productivity: Physical capital such as buildings, equipment and machinery is important for increasing the quality and quantity of production. However, using these resources effectively is more important for the rise in productivity and capital value. Human resource plays the most crucial role and without which it is not possible to innovate, use and upgrade physical capital for economic development. Educational investment provides higher quality of human resources to increase the level of production.
Development in mental ability: Decision-making ability and mental abilities of an individual are developed through continuous investment in education. It develops the ability to make right choices of the available resources in the economy. This leads to efficient use of resources resulting in higher productivity. Thus, education prepares individuals as human resources for a nation.
Modernisation: The education system focuses on increasing productivity of human resources with technical progress at all levels of work. It increases the receptivity of people to modern and scientific ideas. Since independence, the number of technical and professional educational institutions increased to a great extent. Thus, the use of advanced technology in the production process becomes easier with suitable educational system.
Increase in the standard of living: Higher expenditure on education increases the efficiency of the labour productivity as they become skilled in their jobs. An educated person possesses higher productivity and efficiency and therefore has a relatively higher income earning capacity. The higher income and greater access to modern techniques with rise in the education level raises the standard of living and quality of life in the nation. 
Increase in participation rate and equality: An individual with the capacity to obtain knowledge and specialised skills provides higher employment opportunities. This enhances the productive efficiency and the rate of participation of workers in economic, social and political activities. This high rate of participation implies the high degree of economic and social equality in a nation. 

Answerd By:milan-ransingh

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