What Is the Relationship between the Workforce and Economic Development?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 03 December 2019
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The relationship between the workforce and economic development lies in the fact that the workforce is the vehicle that drives economic development. Developmental ideals that will lead to economic development can only be initiated and implemented by the human components in any economy since an economy cannot establish itself in an abstract sense. This link between the workforce and economic development is one of the reasons the human components in any economy have a direct impact on the level of economic development in that region. Their deposit of human capital in terms of knowledge, experience and other related factors like good health are vital to the development of any economy, which can be demonstrated by contrasting the result of an economy that lacks a well-organized, healthy and educated workforce to that of an economy that has the opposite.


A way of showing the link between the workforce and economic development is by showing the way in which such a workforce is directly related to the success of any business within a stated economy, or even in the global economy as a whole. For instance, assuming an information technology company is looking for employees to hire, it will naturally look for employees who have the most desirable human capital in terms of a high degree of skill, experience and broad formal education. In recognition of the importance of a such a valuable workforce, the company might be willing to expend a lot of resources, both material and financial, as a means of attracting and retaining this valuable workforce. The growth of such a company will be dependent on the quality of its employees, something that is replicated in other companies and will also be achieved through the general state of the workforce in that economy.

Connections between the workforce and economic development also serve as a criteria for the development and implementation of various governmental policies that recognize the importance of the workforce in the growth of the economy. Where the workforce is well trained, healthy and have access to good education, they will return the investment made into their development and nurturing into various activities aimed at improving the economy. For instance, the contributions flowing from the labor of the workforce will be applied toward different aspects of economy development and developmental projects, such as the building of infrastructure to facilitate communication and transportation, and the development of new concepts by innovators.


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