How human and social capitals collectively help drive growth and development?

In 1964, Becker describes human capital as the skills and knowledge that make individuals productive similar to the physical capital to invest in ones’ knowledge and the skills for its future return on that investment.

Knowledge however can have important implications for the long-term sustainability of firms.

Researcher Tanner suggests that investment in knowledge can also raise production to new procedural stages, which in turn can initiate new waves of growth.

In the year 2003, the Productivity Commission states that growth, in general depends on the varieties of resources a country invests in and the range of research focused on that increases the contribution of human capital.

 

For example, the growth in education that develops from ongoing training and technological change stems from its research and innovation.  Similarly, social capital can generate benefits to the general public that can be achieved by reducing operation costs, promoting supportive behavior, circulating knowledge and innovations to create individual well-being and related spillover through expansions and augmentations.

On the other hand, Abramowitz and David (1996) consider economic growth and social advancement rest on there being structures that enable investment, allow innovation and technological transfer and avoid vested interests from obstructing such progression.

According to Kniivila, the author of ‘Industrial development and economic growth: Implications for poverty reduction and income inequality’ that investment in human capital and technological improvement are important and needed to endure global competitive and sustainability.  While there are speedy technical change and globalization, competition is becoming more powerful, the ability to employ new technologies is unquestionably crucial to grow.

Capability for that reason is in particular a purpose of educational achievement and skill level of the workers.  Social capability thus raises society’s execution on integrating technology for marketplaces to function and government’s incentive to structure so as to promote economic efficiency.

In the meantime, it is important to recognize that Gross Domestic Product (GDP) does not take pollution, resource depletion and long term environmental damage into consideration not to mention human well-being. In fact the Genuine Progress Indicator (GPI) which is used in ‘green economic’ should replace the GDP is rational.



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