Human factors
Improving the quantity and quality of human resources
The quantity of labour is important. Increases in the population can increase the number of young people entering the labour force and these increases in the supply of labour can increase economic growth. Increases in the population can also lead to an increase in market demand thus stimulating production. However, if the population grows at a faster rate than the level of GDP, the GDP per capita will fall. This can be seen from the two charts below.
Chart 1 Average GDP growth 2006-9
There is also a static version of this chart available.
Chart 2 Average GDP growth per capita 2006-9
There is also a static version of this chart available.
Note the difference between these last two graphs. The first shows average GDP growth over the last two decades and the second shows the same figure, but adjusted to show how much GDP per capita (per person) has changed. This effectively adjusts for changes in the population. Where there is little or no change in population the difference is small (e.g. the UK), but where population is growing fast (e.g. Tanzania) the difference is greater.
However, it is not simply the amount of labour that will lead to economic growth. It is also the quality of that labour. This will depend on the educational provision in countries. Improving the skills of the work force is seen as being a key factor in promoting economic growth. Many LDCs have made enormous efforts to provide universal primary education. As more and more capital is used, labour has to be better trained in the skills to use the capital, such as servicing tractors and water pumps, running hotels and installing electricity. It should always be remembered that education spending involves an opportunity cost in terms of current consumption and thus it is often referred to as investment spending on human capital.
So what we can be done to improve the quality of labour and boost economic growth? Think through some ideas and then follow the link below to see how your answers compare.
Human resources
The enrolment in education and illiteracy levels in selected countries can be seen in charts 3 and 4 below.
Chart 3 Primary and secondary enrolment in education (% age group)
There is also a static version of this chart available.
Chart 4 Illiteracy (illiterate % age 15 and above)
There is also a static version of this chart available.
The quantity of labour is affected by the labour supply and, as we have seen in the previous section, this will depend on changes in the population. In this section we look at some background to population and the factors that will affect it.
