Q+65+What+is+human+capital?+Explain+its+importance+in+economic+development.(Development

Human capital “comprises the skills, knowledge, experience, education and health of the population which makes up the labour pool. Investment in these areas, often called social investment, increases human capital.” An improvement in human capital will lead to population growth and this inevitably adds to potential growth of an economy. This can be shown by a PPF curve: __ Investment in human capital __ By increasing investment in the short run PPFSR, i.e. the movement from point A to B will eventually lead to the potential for the curve to shift to the right to point C. A study done by the World Bank in 1993 concerning East Asia suggested that one of the main factors of strong economic development was attributed to investment made towards basic education. This would enable better labour mobility around the world and increased entrepreneurship; things which attract foreign direct investment which is linked to helping firms expand and stimulating positive speculation.