III. Human Development and its Impact on Growth
Human development, in turn, has important effects on economic growth. If a
central element of economic growth is allowing agents to discover and develop their
comparative advantage, an increase in the capabilities and functionings available to
individuals should allow more of them to pursue occupations in which they are most
productive. In this sense human development can be seen as the relaxing of constraints
which may have interfered with profit maximization. Furthermore, although human
development represents a broader concept, many of its elements overlap significantly
with the more traditional notion of human capital. Thus, to the extent that human
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development is necessarily correlated with human capital and human capital affects the
economic growth of a nation, human development is bound to have an impact on
economic growth.