1.

2 Contribution of Education to Economic Growth

1.2.1 Meaning of economic growth
Economic growth is simply defined as the expansion of economys
output over a long period of time in a country.
Economic growth is the change in the level of economic activity from
one year to another.
Economic growth is a precondition or basic pillar of economic
development.
Economic growth refers to increase in the actual output of goods and
services as well as increase in the economys capability of produce
goods and services.
Economic growth measured by the countys GNP/GDP .

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 Determinants factors of economic growth

1.Natural resources: Flows and Stock, Renewal and Nonrenewal.

2.Capital goods: Monetary and nonmonetary physical goods.

3.Human capital: Availability of skilled and semi skilled labors.

4.Entrepreneurship: Taking high risk, induce new idea and innovations.

5.Level of employment, and

6.Use of technology: Practical aspect of science. It include that physical

and nonphysical things [hardware, software and system or idea]

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Different between economic growth and economic development

Economic Growth Economic Development

Economic growth refers to an Economic development indicate changes

increase in the real output of in income, savings and investment along
goods and services in the with progressive changes in socio-
country. economic structure of country.

Brings quantitative changes in Brings qualitative and quantitative

the economy. changes in the economy.

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 Cont..
Economic Growth Economic Development
Economic growth relates to a Economic development relates to
gradual increase in one of the growth of human development
components of GDP: consumption, indexes: decrease in inequality, and
government spending, investment, structural changes that improve the
net exports. general population's quality of life.
Narrower concept than economic Normative concept.
development.
Economic growth is a more relevant Economic development is more
metric for progress in developed relevant to measure progress and
countries. quality of life in developing nations.

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 How does contribute education to economic growth?

Economists view of education

According to Adam Smith, Education as kind of capital which

embodies acquired knowledge and skill. Education helps to increase
the productive capacity of worker in the same way as the purchase of
new machinery or form of physical capital.

Similarly Theodore Schultz state that It is simple not possible to

have the fruits a modern agriculture and the abundance of modern
industry without making large investment in human
beings/education.

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 How does contribute education to economic growth?
Education can improve economic growth performance by:

A. Improving the quality of labour, and the quality of

physical capital through the application of knowledge,

B. Creating spillover effects on other sections of society and

offsetting the diminishing returns to capital, and

C. Providing one of the most important inputs into Research

and Development, and attracting Foreign Direct
Investment

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