What factors contribute to human capital formation?
Human capital formation is an aggregate outcome of the investments in education, health, transport and communication sector, technical know-how and on-the-job training and migration. These factors are explained below.
i. Education
Education not only raises the standard and quality of living but also encourages modern attitudes of people. Moreover, education increases the productive capacity and productivity of a nation's workforce by honing their skills. Further, education increases the acceptability of the modern techniques and also facilitates a primitive economy to break the shackles of tradition and backwardness. An investment in educational sector has two fold benefits. It not only increases the income earning capacity but also reduces the skewed distribution of income, thereby, forming an egalitarian society. The investment in educational sector has long lasting returns. It not only enhances the present economic condition but also improves the future prospects of a country. The importance of education is not only limited to making people educated but also in facilitating an underdeveloped economy to solve different but interrelated macro economic problems like, poverty, income inequality, population, investments, under utilisation of resources. Therefore, investment in education must be accorded high priority in a country.
ii. Health
There is a saying “The greatest wealth is health”. The wealth of a country can be increased with the efforts of healthy workforce. Investment in health sector increases efficiency, efficacy and productivity of a nation's workforce. In contrast to an unhealthy person, a healthy person can work better with more efficiency and, consequently, can contribute relatively more to the GDP of a country. Good health and medical facilities not only increase the life expectancy but also improve quality and standard of living. Investing in health sector ensures the perennial supply of healthy workforce. Some of the common expenditures incurred in the health sector are on providing better medical facilities, easy availability of life savings drugs, common vaccination, spread of medical knowledge, provision of proper sanitation and clean drinking water, etc. Thus, the expenditure incurred on health is important in the building and maintaining a productive work force.
iii. On-the-Job Training
Training refers to the act of acquiring skills, knowledge and competency required to perform a particular job efficiently and effectively. On-the-job training is the most effective kind of training to a trainee, imparting him the technical skills and know-how at the actual work site. In this type of training, a trainee is assisted (or hands on) and trained by a trainer (usually by an experienced employee) when the trainee is actually doing the job. This helps the trainee not only to acquire the theoretical and practical skills simultaneously but also enables him to learn from the experiences of his trainer and, thereby, can increase his efficiency and productivity. This is the most common type of training programs because the returns in terms of increased productivity far exceed the cost of the training. Thus, the expenditures on such training improve the quality of human capital by enhancing its productivity, efficiency and income earning capacity.
iv. Migration
Migration refers to the movement of people from underdeveloped or developing countries to developed countries in search of better avenues. Migrations contribute to human capital formation as it facilitates the utilisation of inactive or underdeveloped skills of an individual. The cost of migration involves cost of transportation and cost of living at the migrated places. Usually, the cost of migration is very high due to the high cost of transportation and high cost of livelihood in the developed countries. But still, people migrate in search of better job opportunities and handsome salaries. Migration of human capital helps the underdeveloped countries to acquire technical skills, efforts reducing methods and efficient way of performing tasks. These skills and know-how are transmitted by the migrated people to their home country that not only add to the economic growth and development but also enhance the human capital of the home country.
v. Information
The degree of availability of jobs, salaries and admissions related information also play an important role.
Discuss the need for promoting women’s education in India.
Trace the relationship between human capital and economic growth.
Discuss the following as a source of human capital formation
(i) Health infrastructure
(ii) Expenditure on migration.
‘There is a downward trend in inequality world-wide with a rise in the average education levels’. Comment.
What are the main problems of human capital formation in India?
Education is considered to be an important input for the development of a nation. How?
How is human development a broader term as compared to human capital?
Argue in favour of the need for different forms of government intervention in education and health sectors.
What are the indicators of educational achievement in a country?
How government organisations facilitate the functioning of schools and hospitals in India?
What was the focus of the economic policies pursued by the colonial government in India? What were the impacts of these policies?
What do you mean by rural development? Bring out the key issues in rural development.
Define a plan?
Who is a worker?
Explain the term ‘infrastructure’.
What is meant by environment?
Why are regional and economic groupings formed?
Why were reforms introduced in India?
Why calorie-based norm is not adequate to identify the poor?
Name some notable economists who estimated India’s per capita income during the colonial period?
Explain the steps taken by the government in developing rural markets.
Define the liberty indicator. Give some examples of liberty indicators.
Indicate the volume and direction of trade at the time of independence.
What do you mean by transmission and distribution losses? How can they be reduced?
Does modernisation as a planning objective create contradiction in the light of employment generation? Explain.
Describe the path of developmental initiatives taken by Pakistan for its economic development.
Explain how import substitution can protect domestic industry.
Distinguish between ‘Green Revolution’ and ‘Golden Revolution’.
Why and how was the private sector regulated under the IPR 1956?
Critically evaluate the role of the rural banking system in the process of rural development in India.