ABSTRACT
Education and health/nutrition, which we called “basic needs” in characterizing the dimensions of development in Chapter 1, are both essential development outcomes and essential instruments for development: they are simultaneously ends and means. Because education and health are intrinsically valuable to individuals for their wellbeing, they are development objectives in themselves. For this reason, the Human Development Index gives salience not only to per capita income, but also to levels of achievement in education and health in characterizing a country’s level of development. But education and health are also major sources of economic growth, a key dimension of development. This is because better education and health contribute to raising the productivity of labor and the quality of entrepreneurship, and hence the levels of wage and income. On the labor market, education serves as a signal for unobservable ability in helping employers select workers.
