Population, education and human capitalAfter studying this chapter, you should understand:
|• the connection between population growth rates and the level and growth rate of income per capita;|
|• the importance and causes of the demographic transition and the effect on birth and death rates;|
|• the determinants of the fertility rate, particularly income per person and the level of education of women;|
|• the importance of education and human capital accumulation to economic growth and human development; and|
|• the role for government action to overcome market failure in the creation of human capital.|
The most malleable factor of production available to any economy is its population. Our consideration of endogenous growth theories in Chapter 8 and of the recent success of structural transformation of the so-called "high performance East Asian economies" (HPAEs) in Chapters 9 and 10 has highlighted the importance of an educated labor force to economic growth. Education is the means by which a nation is able to appropriate from and share in the gains arising from technological advances at the world level. A sufficiently educated labor force would seem to be absolutely necessary for sustained growth and for achieving full human development; even a nation that succeeds in avoiding all the other pitfalls of developing societies considered in the next part of the book but which neglects education will not succeed in developing as quickly or to such a high level as would be possible with more and better human capital.
The accumulation of a productive stock of human capital is thus one of the fundamental keys to the development process.
1 There is the question, however, as to how the growth rate of population and the growth of the labor force affect the level and pace of economic growth and development, and the pace of human capital accumulation itself. So, prior to considering in more detail the importance of the human capital input to development, it is necessary to briefly examine the nature of what is often called the "population problem."