Trace the relationship between human capital and economic growth.

Question

Accepted Answer

Human capital is believed to be positively related to economic growth:
- i. **Increase in Labour Productivity:** Investment in human capital enhances labour productivity. With increased productivity, output increases at an increasing rate, accelerating economic growth.
- ii. **Innovations:** Human capital formation prepares learned scientists and researchers who bring out innovative products, technologies and processes.
- iii. **Absorptive Capacity:** Advanced technology can be adopted only if relevant skills and knowledge exist. Investment in education and training helps create this knowledge base.
- iv. **Participation Rate:** Human capital formation makes a greater proportion of the population capable of participating in economic, social and political activities.