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The Economic Well Being of Egyptians in a Globalized WorldBox (2.3)Does Human Development Impact Economic Growth?The connectionbetween HD and EG,is likely to be strongerthe more equitable thedistribution ofincome, the moreeducated women are,and the lower theunemployment rate.The many ways in which humandevelopment contributes to economicgrowth have often been emphasized. Inrecent years an increasing number of studieshave documented the strength and diversityof the links between the two.The strength of the links between humandevelopment and economic growth depends,firstly, on the accumulation of human capitalthrough investments in health and nutrition,education and skills training, and R&D.Secondly, it depends on accessibleopportunities for people to contribute toeconomic development through social,political, and economic participation.Evidence suggests that as people becomehealthier, better nourished, and moreeducated, they contribute effectively toeconomic growth. A higher levels of HD, inaddition to being an end in itself, affects theeconomy by enhancing people's capabilitiesand consequently their creativity andproductivity. Clearly, the health andeducation of a population are among themain determinants of the composition andgrowth of output.Numerous studies indicate that increases inearnings are associated with additional yearsof education. Education is also an importantcontributor to technological capability andtechnical change in industry. The higher thelevel of education attained by the workforce,enrollments and average income is moreresponsive to annual changes, whenaggregated to the national level, it still failsto give credit to policies that raiseenrollment among marginalizedcommunities, or that tackle income povertyamong the most deprived. Thus, beforeexamining the interaction betweeneconomic growth and HD, three questionsshould be answered. First, should we use abroader HD concept to include more socialand economic indicators than those used inHDI? Second, what are the HD dimensionsthat are most relevant to economic growth?And, finally, how can these dimensions bemeasured and combined into one singlemeasure?the higher overall productivity is, because themore educated are more likely to innovate,and thus affect everyone's productivity.Furthermore, education may affect per capitaincome growth through reducing populationgrowth. Income distribution also appears to beimportant to this link. Recent empiricalevidence suggests that the distribution ofassets and income has an effect on economicgrowth, with a more equitable distributionfavoring higher rates of growth. Oneexplanation is that a more equitabledistribution of assets and income impliesbetter nutrition and a stronger demand foreducation and hence higher labor productivity.The strength of these various links variesconsiderably and there is no automaticconnection between an improved level of HDand increases in per capita GDP. Creating alarger pool of educated people is not sufficientto stimulate growth; there must also beopportunities for them to be productivelyemployed. Besides, human development alonecannot transform an economy. Even skilledand vigorous people need machinery,buildings and infrastructure to complementtheir efforts to enhance growth.In summary, the connection between HD andEG, is likely to be stronger the more equitablethe distribution of income, the more educatedwomen are, and the lower the unemploymentrate.Variations in the currently used HDI mainlyreflect long term indicators that are slow tochange. It is thus useful to introduce moredimensions and indicators into the analysisto account for short and medium termchanges. Accordingly, a broader humandevelopment index (BHDI) has been constructedfor Egypt, using disaggregated data at thegovernorate level (See Annex 2.1).Interaction Between EconomicGrowth and Human DevelopmentThe relationship between HD and EGacross Egypt’s governorates over twosuccessive periods, 1986 - 1990 and1990-1996, is shown in Table (2.1). Human30 -Egypt Human Development Report 2000/2001