The above findings also have strong implications for government policy. If HD
improvements are indeed a precondition for sustainable EG, government policy and
public funding may be necessary to move a nation above the HD threshold level. Nations
stuck in vicious cycles, or low-HD poverty traps may need targeted government
investments to meet the fixed costs of HD improvements that will lead to later economic
growth. These fixed cost investments may include schools, hospitals, and the necessary
governance improvements to effectively implement investment projects.
The crucial lesson that emerges is that the old-fashioned view of “grow first and
worry about human development later” is not supported by the evidence. Improving
levels of education and health should have priority or at least move together with efforts
to directly enhance growth.