Chapter 2
Human Capital: Education and
Health in Economic Development
,The Central Roles of Education
and Health
Education is a form of human capital vital to growth
and development as input to aggregate production
function. It is an input to growth and development
It is both a consumption and investment good for the
individual
It is a basis for a healthy life and improves the return
to investment in health
On national level, it plays a key role in the ability of a
developing country to absorb modern technology
thereby enhance a self-sustaining growth and
development
Prepared by Girma Menedo (Msc) 2
,The Central Roles of Education and
Health…
Health is central to wellbeing and fundamental to human
capabilities
It is an input to aggregate production function as a form
of human capital
It is a prerequisite for increases in productivity and a
condition for successful education
Both health and education are forms of human capital
that are closely related to one another
Though they are related to household income, higher
household is no guarantee of improved health and
education
Prepared by Girma Menedo (Msc) 3
, Education and Health as Joint
Investments for Development…
Greater health capital may improve the returns to
investments in education
Greater education capital may improve the returns to
investments in health
International trends indicate a convergence in health
and education (human capital)
The progress are measured using the following ratios
and indices
Primary and Secondary enrollment rate, Teacher-
pupil ratio, average schooling in years
Life expectancy, survival rate
Prepared by Girma Menedo (Msc) 4
Human Capital: Education and
Health in Economic Development
,The Central Roles of Education
and Health
Education is a form of human capital vital to growth
and development as input to aggregate production
function. It is an input to growth and development
It is both a consumption and investment good for the
individual
It is a basis for a healthy life and improves the return
to investment in health
On national level, it plays a key role in the ability of a
developing country to absorb modern technology
thereby enhance a self-sustaining growth and
development
Prepared by Girma Menedo (Msc) 2
,The Central Roles of Education and
Health…
Health is central to wellbeing and fundamental to human
capabilities
It is an input to aggregate production function as a form
of human capital
It is a prerequisite for increases in productivity and a
condition for successful education
Both health and education are forms of human capital
that are closely related to one another
Though they are related to household income, higher
household is no guarantee of improved health and
education
Prepared by Girma Menedo (Msc) 3
, Education and Health as Joint
Investments for Development…
Greater health capital may improve the returns to
investments in education
Greater education capital may improve the returns to
investments in health
International trends indicate a convergence in health
and education (human capital)
The progress are measured using the following ratios
and indices
Primary and Secondary enrollment rate, Teacher-
pupil ratio, average schooling in years
Life expectancy, survival rate
Prepared by Girma Menedo (Msc) 4
