Economic Growth

1693 Words7 Pages
Name__________________ I. INTRODUCTION+ Economic Growth has posed an intellectual challenge ever since then beginning of systematic economic analysis. Adam Smith claimed that growth was related to division of labour, but he did not link them in a clear way. After that Thomas Malthus developed a formal model of a dynamic economic growth process in which each country converge toward stationary per capita income. According to that model, death rates fall and fertility rises when income exceed the equilibrium, and opposite occur when incomes are less than that level. Despite the influence of the Malthusian model in nineteenth century economists, fertility feel rather than rose as income grew during the past 150 years in the west and other parts of the world. The Neoclassical growth model of Solow (1956), which has been for the past thirty years the central framework to account for economic growth, focuses on exogenous technical population factors that determine output-input ratios, responded to the failure of Malthusian model. Neither Malthus’s nor the Neoclassicists approach to growth pays much attention to Human Capital. Yet the evidence is quite strong of close link between investments in human capital and economic growth. Since human capital embodied knowledge and skills, and economic development depends on advances in technological and scientific knowledge, development presumably depends on the accumulation of human capital. Investment in human capital has been a major source of economic growth in advanced countries. The negligible amount of human investments in underdeveloped countries has done a little to extend the capacity of people to meet the challenge of accelerated development. Schultz (1961) noted that the gro... ... middle of paper ... positive relationship between human capital measures especially at secondary and higher levels of education and economic growth. It means that if there is increase in human capital investment at these levels of education, it helps to increase economic growth. CONCLUSION In this paper, He made an attempt to determine empirically the role of human capital in economic growth, a comparative analysis of two developing countries. The neoclassical growth theory suggests that growth would be negatively related to initial stock of capital. Thus there -would observe a convergence of the growth paths of countries. In the recent past, economists have come with a different analysis of the growth process, where growth is an endogenous process brought by human capital accumulation. REFERENCES The Pakistan Development Review 39 : 4 Part II (Winter 2000) pp. 451–473

More about Economic Growth

Open Document