Econ: Economics and Human Capital Essay

Submitted By jengaver
Words: 547
Pages: 3

1. Economic growth can lead to not only to growth with the goods people can buy, but also can lead to lower poverty rates and longer life expectancies. Because of this economic growth, people can afford better medical care, more nutritious foods, and more relaxation in order to reduce stress. Small differences in growth can lead to dramatic differences in income due to the effect of compounding. Compounding is the ability of growth to build on previous growth. It allows GDP to increase over time as income increases on top of previous increases in income. Even differences as small as innovation in order to allow countries to be self-reliant can lead to big differences over time. It is the combination of many efforts and policies that lead to long-run economic growth.
2. Productivity is how effectively inputs are converted into outputs. Labor productivity can be improved by improving quality of labor. It can also be improved by increasing the capital-to-labor ratio. In order for countries to improve labor productivity they must not only expand the quantity of their labor force, but also the quality of labor to ensure that economic growth exceeds population growth. An investment in human capital is an improvement to the labor force. It is from investments in skills, knowledge, and the overall quality of workers and their productivity, or human capital. By investing in human capital, nations can raise their growth rates by improving worker productivity.
3. Governments use research centers in order to help build technology and ideas. In addition to running research centers, the government provides funds directly to public and private research centers. The government maintains its mission of promoting research essential for a nations economic health and global competitiveness.
4. A stable financial system is essential for economic growth. This system keeps the purchasing power of the currency stable. It also facilitates transactions, and permits credit institutions to arise. Because of financial instability recently, the global financial system was in turmoil. These problems would be less likely to happen when the…