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Education and health

2 components of human capital Everyone should be entitled to receive an education and to have access to services allowing then to achieve their potential for good health Education should be compulsory and free, at least in elementary and fundamental stages

Reasons behind education and health


Individual that is educated feed and free of preventable diseases, access to health care services has: significantly improved opportunities to find employment decent income escape poverty lead a long and healthy creative life Enjoy a decent standard if living Enjoy freedom, dignity, self-esteem and respect of others reduces illness and physical disability

Both are merit goods with positive consumption externalities. Thus, government intervention is required in the form of subsidies, legislation or advertisement. If left to the market, these services would be underprovided relative to social optimal quantity.

Benefits of Education:
Education increases labour productivity and greater output, resulting in economic growth Improvement of quality of physical capital because knowledge can apply to research & development and development of technologies appropriate to local conditions (economic ecological climate conditions) Results in lower unemployment and lower absenteeism from work. Increases international competitiveness and attract foreign direct investment Increase political stability, important for growth & development Provides social benefits, better quality of life, low come rate Education of women. Increase participation in labour force, lower birth rates, slower population growth and reduction of poverty

Benefits of Health:
Greater work productivity and thus, greater output and economic growth Do not transmit diseases, lower risk of spreading disease Immunization benefits not only immunized person but society as well by lowering risk of contracting disease

More active and productive participation providing more benefits

Combined benefits of Health and Education:


Education of women lead to improvements in maternal health and reduction in maternal mortality Education of mothers result in healthier children through improved health care and nutrition, resulting in lower child mortality and lower mortality within a family Schools educate children about basic principles of hygiene which improves levels of child's and family health Increased levels of health improves school attendance and performance in school, leading to longer periods of time spent in school Healthier individuals make better use of knowledge and skills they possess Better health results in longer lifespan and a longer time during which the benefits of education can affect economy and society

Appropriate technology
New technology is major driving force of economic growth, with vast potentials for economic and human development Technology must be well-suited to particular economy, geographical and climate conditions

Different factor supplies (Labour and Capital)


Labour-using technologies use more labour in relation to capital. They results in increase in local employment and the use of local skills and materials, increase in incomes and poverty alleviation, and save on the use of scarce foreign exchange Capital-using technologies use more capital in relation to labour. In DCs with large supplies of labour they displace workers and increase unemployment, reduce incomes and throw people into poverty, and require skill levels that may be costly and difficult to acquire, as well as the use of foreign exchange for imports

Different climate and ecological conditions


Technology developed in DCs not suitable to be used in LDCs Agriculture, characterized by different climatic conditions, soil, disease agents and other agronomic factors. Agriculture technologies developed for temperate zone climates are often not well-suited to tropical zones where most LDCs are located

Difficulties in development of appropriate technology


LDCs have few resources to devote to R&D and new technology development Private sectors in LDCs face few incentives to engage in R&D Small markets are related to low incomes, because when people live on very low incomes, their needs for specific goods and services do not show up in any market as demand

Banking, credit and micro-credit


Banking services and access to credit are important to economic growth and development Provide link between savers and investors, making fund saved by savers available to borrowers who wish to make investments

Significance of banking and crediting


Provide an incentive for people to save because they offer a return (in the form of interest) Provide businesses and farmers with credit to open, run and expand their businesses and farms Provide consumers with credit that can be used for investments in human capital (education and healthcare), increasing productivity of labour Access to credit is very important for poverty alleviation because poor people are least able to save any part of their income, since they are forced to spend most of it on essentials

Exclusion of poor from access to credit


Commercial banks in LDCs often cater to larger, wealthier borrowers Banks more interested to in providing loans to multinational corporations or large domestic firms Prefer borrowers in manufacturing who are considered to be more creditworthy and are believed to be the driving force of industrialization Bank lending influenced by political interest ands and the power of local elites with large control over business and financial sectors People in LDCs forced to rely on informal sources of credit consisting of moneylenders who charge high interest rates; pawnbrokers who lend amounts far smaller than the value of the article that has been pawned; friends and family from whom supply of loanable funds is irregular or insufficient

Micro-credit schemes
Refers to loans in small amounts to people who do not ordinarily have access to credit

Micro-credit is delivered to poor people through microfinance institutions Result in higher incomes, more stable incomes, as well as improvements in health, nutrition and primary school attendance

Controversies in micro-credit
Become a substitute for urgently needed government anti-poverty policies Contribute to the growth of the informal sector Some extremely poor and highly unskilled people may be harmed by micro-credit Interest rates in micro-credits are too high

Empowerment of Women
Definition of Empowerment = Eliminating the deprivations and creating conditions of equality of opportunities. Gender Inequality = Control and restriction of resources & opportunities from women

Consequences of Gender Inequality


GENDER INEQUALITY IN: Health Missing women -> neglect of women in their infancy and childhood with respect to their health and nutrition -> unnecessary deaths. Due to limited income and necessities, boys are more likely to receive sufficient food and healthcare. Education & Training Limited income and resources in a low-income family -> unable to educate all children equally + cultural factors dictate that the education of girls is less important than that of boys (e.g. in some societies, educated women are viewed as less marriageable -> girls arent educated -> lower adult female literacy than adult male literacy

Labour Market Insufficient education and training -> women are disadvantaged relative to men -> no qualifications/skills to tackle high-level jobs More women in informal sector of the economy/unregulated labour market -> lower incomes; no benefits (e.g. job security, legal protection of workers rights; pensions) -> subject to exploitation by employers Far more likely to have unpaid responsibilities -> e.g. child-rearing, household chores Inheritance & property rights In most LDCs, such rights are mostly passed to men -> e.g. land is OVERWHELMINGLY owned by men Income, wealth & poverty

All the above factors -> poverty Additionally mens inheritance & property rights ensure that most of the wealth is controlled by men

Positive Externalities (External Benefits) of Womens Empowerment


1. Improvement in child health and nutrition -> lower child/infant mortality More educated women -> greater knowledge on health services, health, basic hygiene

2. Improvement of educational attainment of children Mamas have major influences on education of children -> ACCORDING TO STUDIES Educated women understand the importance of education for childrens futures

3. Quality of human resources Improved health & education of children -> improve quality of human resources in future -> promotes economic growth & development Policies which improve the education of women -> help poor families break out of the poverty cycle

4. Lower fertility (Good or bad?) More educated women -> more and better work outside home -> later marriage More educated women -> greater reproductive choice Above two points -> reduced population growth