less educated farmers. Similarly, in Nepal, the completion of at least seven years of
schooling increased productivity in wheat by over a quarter, and in rice by 13%.
On the other hand, in macro level, the ‘new growth theories’ aim to endogenize
technical progress by incorporating some of these same effects, emphasizing education
as well as learning. The impact of education on the nature and growth of exports, which,
in turn, affect the aggregate growth rate, is another way in which human development
influences macro performance. The education and skills of a developing country’s labor
force influence the nature of its factor endowment and consequently the composition of
its trade.
The concept of social capital draws from various disciplines and sectors has
breathed new life into arguments concerning the role and standing of “the social aspects”
of development. There is an increasing awareness that community life and institutional
quality together could do better to enhance the capacity of societies, manage risk, accept
change, and grab opportunities. In the light of the mentioned problems, there is an
urgent need of skilled human resources, or educated think tanks, who are able to
understand and tackle with the given situation.
C. Effects of Education and Income/Earnings’
As education becomes more broadly based, low-income people are better able to
seek out economic opportunities. For example, a study of the relation between
schooling, income inequality and poverty in 18 countries found that one quarter of the
variation in workers’ incomes was accounted for by variations in schooling attainment;
it concludes that ‘clearly education is the variable with the strongest impact on income
equality’.
Poverty, unstable and undergrowth of GDP, unemployment, and high age
dependency ratio are common issues in the most of the developing countries such as
Asia, Africa, and Latin America. Data clearly shows that more than 1.3 billion people
earn less than US $1 per day, people in these countries have been afflicted by poverty
and hunger over long periods (Sinnathurai, 2013). He clearly scrutinizes the nexus
among poverty, economic growth, employment, and dependency ratio in Asia, Africa,
and Latin America and found that poverty, poor and unstable growth of GDP,
unemployment, and high age dependency ratio are common issues in the most of the
people of developing countries have been afflicted by poverty and hunger over the long
period. Similarly, he also displays that lower the labor productivity impacts lower the
economic growth and higher the unemployment, and poverty. On the other hand, there
is high dependency ratio in a family or in the case of the developing countries leads to
lower productivity of such labor force. Thus, this proves the inverse relationship between
poverty and employment and also poverty and economic growth. Schultz (2009)
identifies that higher rate of economic growth pays the way the sustained and stable
increase in productive capacity, employment opportunities with rising productivity are
generated in the economy. That’s why this empowers the country to absorb more
employees in the production and allied activities and thereby decreasing the
unemployment rate. These conditions help including poor people in the industrial
activities and thus, are benefitted in turning productive labor force finally helping to
standardize their lifestyle.
Methodology
There are many reasons why education is important, this report focuses on its
contribution to economic growth and outcomes. Education ‘can be defined as the stock
of skills, competencies, and other productivity-enhancing characteristics’ (WEF 2016).
In general, education—as a critical component of a country’s human capital—increases
the efficiency of each individual worker and helps economies to move up the value chain
beyond manual tasks or simple production processes (WEF 2016). Human capital has
long been considered the most distinctive feature of the economic system and further
work has proven the impact of education on productivity growth empirically.
Human capital formation (a population’s education and health status) plays a
significant role in a country’s economic development. Better education leads not only to