Question

Why is economic growth a goal of most if not all nations of the world? Why is investment in technology and human capital important ingredients of economic growth?

Answer 1

Economic growth is needed to better satisfy the wants and needs of a growing population. With economic growth, society gets more goods that can be used to satisfy more wants and needs--people are better off; living standards rise; and scarcity is less of a problem

Economic growth is achieved by increasing the economy's ability to produce goods and services. This goal is best indicated by measuring the growth rate of production. If the economy produces more goods this year than last, then it is growing. Economic growth is also indicated by increases in the quantities of the resources--labor, capital, land, and entrepreneurship--used to produce goods. .

Human Capital as important ingredient of Economic Growth

Investment in human capital is of immense importance for achieving economic growth. By investing in education and health of people leafs to development of human capital formation. This is because if expenditure is incurred on improving the health standards of working population, this will increase the labor productivity. Due to better health standards and facilities labor will fall less sick and remain healthy. Thus they will take less leaves, thus enhancing the productivity and resulting in increased economic growth.

Similarly education plays an important role in the development of human capital and enhancing economic growth. If a worker is well educated, he will possess better skill sets, thus his demand in labor market will improve. Also he will be able to use the new technology in an efficient and better way. This will result in increasing productivity and resulting in increased economic growth.

Technology as an important ingredient of economic growth.

Technological advances have significantly improved operations and lowered the cost of doing business. Use of Automation , Robotic systems, innovative inventory management system result in speedy production of goods, thus improving efficiency and productivity and ultimately enhancing economic growth. Development in Computer Industry and telecommunications have increased economic growth. With the use of internet communication has become more effective. The physical barriers due to distance have been removed. The link between suppliers and customers have been strengthened. Proper distribution of goods as per requirements of customers have solved the problem of overproduction and underproduction , thus leading to efficient and optimum utilisation of resources.Ecommerce and online banking capabilities have also helped reduce the cost of doing business. So we can say that enhanced technology results in enhanced Economic Growth.