The Effect of Education on Economic Growth

3684 Words Apr 19th, 2013 15 Pages
The Effect of Education on Economic Growth

Abstract

Education is one of the primary factors of development. Countries can’t achieve economic development without investment in human capital. Vocational training and higher education equip a worker to perform certain jobs or functions .It improves the quality of their lives and leads to social benefits to individuals and society like improving income distribution. Education increase people's productivity and creativity and promotes entrepreneurship and technological advances. Technological progress reflects the growth of human knowledge.
The purpose of this paper is to examine the role of investment in human capital in promoting economic growth and
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This function is not accurate because it doesn’t take into account the quality or type of education an individual has. Human capital is also an important variable in the variation wage function which is hard to measure too. Human capital includes some feature such as education, work experience, and health. To estimate human capital, scholars Suggested quantitative measures of quality include “costs per student, library expenditures, number of earned doctorates among Faculty and administrators, and student-faculty ratios.” However, this estimation of human capital is not accurate too. Some scholars argue pupil –teacher ratio is alternative measure of resources invested in education which measure the quantity of education but not the quality. Further more, some research didn’t use the system approach (input, throughputs, and output.) which made some scholar to believe it underestimate the effect of education spending by failing to observe the possible indirect effect on economic growth. All these inaccurate measures and disagreements make it difficult to compare the findings of empirical studies to determine how strong the effect of investment in human capital to promote growth rates of the economy, but macroeconomists in many research stressed the importance of education to promote growth.

Theory and previous research

Many previous researches have asserted that education effect economic growth positively. The main resource of this
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