Kerala 2005 - of Planning Commission

CHAPTER 5
Human Development
and Economic Growth
CONGRUENCE AND CONFLICT
1. Introduction
As already discussed, human development indicates enlarging people’s
choices in a way which enables them to lead longer, healthier and fuller
lives. As has been stated by Ranis et al (2000), higher levels of human
development in addition to being an end in themselves affect the economy
through enhancing people’s capability and consequently their creativity and
productivity. Available evidences suggest that as people become healthier,
better nourished and educated, they contribute more to economic growth
via enhanced capabilities.
Regarding education, variation in the rate of return with the level of
education is often interpreted as the most straightforward indicator of the
impact of education on productivity. It also represents critical elements
in the development of key institutions essential for economic growth.
Positive effects of education encompass all spheres of economic activities.
In agriculture, evidence shows productivity differentials between farmers
using modern technologies and traditional ones. 1 Contribution of
education to technological capability and technical change in industry is
well established, as a plethora of studies have shown positive correlation
between technical change of the firm and the skill and educational level
of the workers and entrepreneurs. As the modern services sector is an
amalgam of activities, which are knowledge-based/intensive, education
and, thus human capital, directly goes in as a factor of production.
1 In Nepal, the completion of at least seven years of schooling increased productivity in wheat by over a quarter and rice by
13 per cent. (Jamison and Moock, 1984).