Question

How does human capital formation help in country's economy?

Answer 1

Human capital is the fundamental source of economic growth. It is a source of both increased productivity and technological advancement. In fact, the major difference between the developed and developing countries is the rate of progress in human capital. The underdeveloped countries need human capital to staff new and expanding government services to introduce new systems of land use and new methods of agriculture, to develop new means of communication to carry forward industrialization and to build the education system. Prof. Galbraith is right in saying that ''we now get a larger part of economic growth from investment in men and improvements brought about by improved men.''

Definition of human capital: Human capital is described as the skills, training, and health acquired through on the job training and education. Michael Pakistan Park defines it as, ''The skill and knowledge of human beings.'' It is also defined as the "endowment of abilities to produce that exists in each human being."

How Can a Country Increase Human Capital?

1.It can be increased through formal education
2.On-the-job training
3.Improved health and psychological well being.

To be more precise, if the people of a country are well educated, well nourished, skilled, and healthy, they are said to have more human capital.

As underdeveloped countries around the world make investments in human persons, they aim to increase their programming skills, social abilities, ideals, and health. These investments aim to increase productivity. The success of their economies depends upon increasing human capabilities. However, human capital does not exist in a vacuum. To better understand this complex topic, we must consider the physical/ passive factors that connect to a country's ability to make these investments.



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