why human capital is best factor of production
Answers
Factors of production have been defined in a way that none can be absent. Factors are different from inputs which differ from product to product but all factors have to be present in any production. Neoclassical economists held that there are factors of productions: land, labour, capital and entrepreneurship. Capital was conceptualized as man-made capital whereas others were not man-made. Resources were invested in creating capital. However, capital was seen in terms of physical capital, whose services were needed for production. Later on, some economists, particularly Schultz, suggested resources are also invested in creating capital within a person and, for example, a better skilled person, other things remaining would produce more.
While presence of all factors is absolutely necessary, some substitutability is allowed in a neoclassical function. [Human capital in growth models was captured through ‘quality’ that augmented labour.] Human capital is complementary with physical capital.
Those who say human capital is most important perhaps the people who can say with ease hands are more important than legs.
I would not say all factors are equally important but would say all factors necessary for any production to take place. In the absence of any factor, production would not take place. This is the way neoclassical economists have defined them.
Unless we choose to devise any new way of dealing with production function, what I said above will hold.
yes human capital is very important factor among all other factors of production bcoz in this factor skill and knowledge is being used and without human capital or skill, knowledge no other factors can be used
I hope this helps you