EFFECTS OF PUBLIC INJECTION/ EXPENDITURE TOWARDS HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH
1.1BACKGROUND OF THE STUDY
Economic Growth which is the quantitative increase in output of goods and services in an economy at a particular point in time (i.e. Increase in production level of every sector of the economy) is one of the most important attributes of the macro-economic goals which every economy aims to achieve but Economic Development is sustained growth in the economy accomplished by improvement in the standard of the living of the people in the economy, it therefore considers an increase in output level that will reflects on Human Capital in the economy which includes though not limited to:-
Higher life Expectancy i.e. Good things of life
Higher Educational level
Good Health facility
Less Mortality rate
Higher Per Capital Income
Increase in employment of natural, human and financial resources in the economy
Higher level of functional infrastructures
Basic facilities or necessities of life e.g. Food, Clothing, shelter etc.
Public Injection or Expenditure is an action the Government to engage in financial activities on a sector or the entire country for the purpose of influencing economic activities or attainment of desirable or preconceived macro-economic goals.
As the Government being the Public Sector plans to engage in certain financial expenditure in its short or long-term budget, it aims at providing certain public goods for the citizens to increase their standard of living which is investing in Human Capital.
However the realization that an healthy and well educated people makes an economy more productive has now shifted the focus of the Government to invest in human capital. Thus Human Capital is now regarded as the primary determinant of a country’s standard of living.
The quality of human resources determines a nation’s growth and development.
Natural resources are being exploited, processed and developed by human beings to eventually benefit mankind. Natural or Physical resources of whatever kind will not on their own contribute to the development of a nation.
Thus the extent to which a nation develops is determined by the level of human resources which is a function of the level of Public Injection or Expenditure.
This justifies the ever increasing government expenditure in education and health towards the development of human resources in the economy. There is a link between highly standard education, health and meaningful development. Education raises the quality of life, improves health and productivity in market and non market work, increases individuals access to paid employment.
According to Marble and Paltrino (1995), Expenditure in education and health raises per capita GNP, reduces poverty and increases life expectancy.
This is because individuals in the economy when healthy and highly educated will contribute effectively to the economic production and will reflect positively on the economy.
Injection of funds into development of Human Capital and enabling environment though is expenditure at present to the Government but could later become revenue to the Government in future.
Considering the case of United Kingdom where over the years have been investing in education and creating good social infrastructures is now recording 40% of its revenue from Net Income from Abroad accrued from foreign student and tourism.