If poor countries wish
to achieve high levels of national income, they need to provide public funding
for the universal education of the poor, at least at the primary and secondary
levels of schooling.
In highly educated
countries the spillover effect on other workers is very small, but unless
educated countries this effect appears to be much larger. In all countries the
positive effect of rising human capital on the productivity of physical capital
is required to offset the diminishing returns to investment and make rising
investment in physical capital financially viable in the development process.
However, technology transfer
requires knowledgeable managers and engineers who are able to operate new
machines or production practices borrowed from the leader in order to close the
gap through imitation.
Therefore, a country's
ability to learn from the leader is function of its stock of "human
capital". Recent studies of the determinants of aggregate economic growth
have stressed the importance of fundamental economic institutions and the role
of cognitive skills.
The implement quality of the country's labor
force and the efforts to make if more productive is very much essential for
contributing greatly to the development of the economy.
