Evidence is presented that economic development requires both human capital and physical
capital and that historically human capital has been the limiting factor in national development.
Education has direct and indirect effects on national income. Evidence is presented that the
indirect effects are very large and larger than the direct effects in poor countries. The indirect
effects are not very large and are smaller than the direct effects in rich countries. Investment in
education has diminishing returns. Macro returns exceed 50 percent in poorly-educated
countries and 12 percent in highly-educated countries.Evidence is presented that economic development requires both human capital and physical
capital and that historically human capital has been the limiting factor in national development.
Education has direct and indirect effects on national income. Evidence is presented that the
indirect effects are very large and larger than the direct effects in poor countries. The indirect
effects are not very large and are smaller than the direct effects in rich countries. Investment in
education has diminishing returns. Macro returns exceed 50 percent in poorly-educated
countries and 12 percent in highly-educated countries