Education and Economic Growth - Essay Example

In other words we can say that the overall well being of people depends upon its economic growth. Therefore the objective of any nation is to increase the size of its GNP. The economic growth of any country depends on various factors such as higher capital and infrastructural investment, better technology and social welfare. The effect of social welfare on growth is a debatable issue. Social welfare includes better health, education, employment and social security. GNP is calculated using the value of final goods and services produced in an economy .

The measurement of GNP thus does not include social welfare however according to many economists social welfare is one of the stepping stone for any nation's growth. This study deals with the effect of education on economic growth. There are two arguments, one says that education generates human capital and thereby leads to growth while another says growth leads to development of educational facilities and thus increases education. Human is one of the basic factors which helps a country to achieve its macroeconomic aims i.e. growth and stability.

The world today is undergoing rapid change in almost every field be it technology, financial markets or management. The people of different nations therefore need to adapt themselves to this change by upgrading their knowledge and generating creative ideas. In conclusion we can say, a country's human resource is one of the important determinants of growth. The human capital of a country depends upon its education level, flexibility of people and teamwork. In the excel sheet "Country consolidated" Graph 1 shows the relationship between per capita GNP and primary enrollment.

Studying the graph carefully we see that low income countries have low primary education and high income countries have high primary education. However in the lower and upper middle income countries primary education does not have much impact on the GNP. The level of primary education in lower and upper middle income countries are almost same, although there is a significant difference in their level of per capita GNP. The second graph i.e. Graph 2 studies the relationship between per capita GNP and secondary enrollment.

In this graph also we see that low income and high income countries have a positive correlation between per capita GNP and secondary education. However the lower and upper middle income countries are showing some variations. The lower middle income countries are showing higher secondary enrollment than the upper middle income countries. Let us understand the reason for these variations. The contribution of human capital to growth depends upon the availability of inputs such as physical capital and technical know how.

The availability of these inputs varies with the level of development i.e. low income countries have low physical capital, suggesting that the growth effects of education will be different for low and middle income countries. The graphs clearly suggests that primary education have positive effects on growth for both low and lower middle income countries where as secondary education has positive effect on the growth of upper middle and high income countries. The third Graph i.e. Graph 3 we find that for the high income count