Human capital refers to the knowledge, skill sets, and experience that workers have in an economy. The skills provide economic benefit because a knowledgeable workforce will contribute to improved productivity. The theory of human capital is that not all individuals have the same abilities or skill sets, everyone is built different, everyone has different skills that they excel at. Also, investment in human education will increase the quality of work because when a person’s skill set is analyzed and their skill is discovered which they can excel in, investing on that skill can help them increase their chances of generating more income. Same is the case with many overseas Africans. Skilled Gambians living abroad send money to Gambia to help their families and also grow country’s economy. In this global age, being able to get to work in another country is quite easy and there are more and more opportunities for each person due to globalization in business. Every company is trying to expand itself to different countries, which is the reason people are getting relocated to new countries and are getting a chance to work there for years.
Relation of Human Capital and Economic Growth:
Economic growth is an improvement in the ability of an economy to manufacturing products and services in comparison with previous times. The improvement in a country’s gross domestic product (GDP) would calculate economic growth. GDP reflects the overall production of the economy’s goods and services.
For instance, if a country has a GDP rate of 2.5% a year, that means that the country’s economic growth grew 2.5% from the previous years. We have to analyze two major drivers of economic growth in an economy in order to evaluate how human capital impacts growth. The more the GDP, the more the jobs the country is generating, the more the income it is generating, and all of this will benefit the economy on a positive scale. It means that the country is moving forward and its human capital is increasing as well as the quality of life of each individual.
Impact on the Gambia:
Human capital is projected to be responsible for over half of the Gambia’s economic development. With higher salaries and higher employees, customers choose to buy more clothing, automobiles, technology, homes and household goods like machinery. All this investment is having a positive impact on the jobs of retailers, carmakers, technology stores and household builders. Gambia needs this human capital because it is a growing nation. It has a new infrastructure that can be regulated and be invested on. For years the country has not been governed properly, but due to investment in human capital by the current government and the impact of globalization on Gambia, there are new jobs that are being generating in the country, which is keeping the people of Gambia occupied. Not just this, as people are coming to Gambia to work, some are going from Gambia to work in other countries, those people are sending the money back to Gambia which is helping in increasing the economy of the country even more.
Expenditure Also Contributes To Increased Economic GDP Growth
Increased GDP growth as a result of consumer spending contributes to business improvements. With firms gaining profit, more capital is being invested in their companies in order to generate potential growth. New machinery and technology acquisitions may require business investment. The Gambia is focusing on initiatives like consumer spending, skillset building and corporate, private joint ventures. At this stage, Gambia will soon start to show the global economies of the world how an economically impoverished country can greatly benefit from globalization in business. Gambia’s increasing economy can show the world that globalization in business will lead to an increased economic GDP. The more businesses that establish themselves here, and the more that are outside the country from Gambia, will help sell products more easily, the more the spending is done—the more the GDP grows.
The position of governments is vital to the expansion of a country’s population’s skills and education. Some governments like the Gambia are interested in the advancement of human capital by offering citizens free higher education. These governments understand that educational awareness helps to build an economy and promotes economic development. Workers with more education or skills tend to have higher profits by adding to consumer spending and increasing economic growth. Gambia’s government is actively engaged in raising human capital to increase its impact on the economy and help the economy grow. Gambia’s government needs to encourage foreign investments and remittances through services like ACE Money Transfer to help the economy grow. Opting for ACE money transaction can lead to safe transference of credit as well as fast transaction which countries like Gambia need the most.