Human Capital Formation
reasons for poor hcf
limited resources serious inefficiencies - unemployment, financial instability population explosion lack of proper manpower planning- imbalance between demands and needs
differences between physical capital and human capital- nature of benefits
physical capital creates private benefit, while human capital creates external benefit- there is a contribution to the socio economic progress of a country.
rate of increase in government expenditure on education
percentage of expenditure increased from 7.92 to 15.7 and percentage of gdp increased from 0.64 to 4.13.
differences between physical capital and human capital- building
physical capital can be built by imports too. .human capital is built by conscious policy formulation of state and its expenditure.
investment on education
similar to spending on capital goods to increase future profits objective of increasing their future income promote economic growth creates more productive force and increased knowledge and skills provides wide spread employment and income generating opportunities
external benefit
something that not only benefits the owner, but the society in general is said to create external benefit.
capital formation
the number of assets which are freshly purchased is called capital formation. while calculating capital formation, we deduct all the second hand goods, assets from the fresh purchase and the residue is the new capital formation.
introduction of the idea of Human capital
A.L. Lewis in his book *Economic development with unlimited supplies of labor.*
future projections on indian economy on the basis of reports
Deutsche Bank- "Global Growth Centers": identifies that India will emerge as one among four major growth centers in the world by the year 2020 World bank- "India and the knowledge economy- leveraging strengths and opportunities": states that if india uses its knowledge as much as ireland, the per capita income will increase over US$1000 in 2002 to US$3000 in 2020. India willl just move its economy to a higher growth trajectory
per capita income
Income per capita is a measure of the amount of money earned per person in a certain area. Can apply to the average per-person income for a city, region or country. Used as a means of evaluating the living conditions and quality of life in different areas. Can be calculated for a country by dividing the country's national income by its population. The figure does not always give an accurate representation of the quality of life
what has the government done to promote education
RTE act which makes free education a fundamental right to all children between 6 and 14 years of age levies 2% education cess on all taxable services, which is used for elementary education (this was before 2015, now repealed) in this way the government hopes to increase expenditure to around 6% of GDP
educational achievements in india
adult literacy rate, primary completion rate and youth literacy rate, which determine the educational achievements of a country, has increased over the last two decades.
how is growth in government expenditure on education expressed
as a percentage of total government expenditure: indicates the importance of education in the scheme of things before the government. as a percentage of GDP: expresses how much of our income is being committed to the development of education
what is hcf associated with
associated with investment on man, his development as a creative and productive resource, expenditure on health, job training etc.
why is government intervention necessary for hcf
both private and social benefits are created expenditures on these sectors make substantial long impact and cannot be easily reversed. individual consumers do not have complete information about the quality of services and their costs. in this case the providers involve in exploitation and this has to be prevented private providers have to adhere to certain standards and charge the correct price.
differences between physical capital and human capital- nature of depreciation
continuous use of machine leads to depreciation and change of technology makes a machine obsolete. in the case of human capital, depreciation takes place with aging but can be reduced to a large extent through continuous investment in education, health etc. thus it can also cope up with the change in technology
How does the expansion of educational opportunities in a nation accelerate the development process?
education gives higher earning capacity to people, better social status, greater knowledge to understand the various aspects of a society, stimulates innovation and facilitates adaptation of new technology.
future prospects in education
education is still a dream for many gender equity is better than before. there is a positive development but promotion of education is necessary there are only a few takers for higher education. this is because unemployment is very high. the government should allocate funds to counter the same
importance of hcf
effective use of physical capital raises the productivity and production as educated workers use resources efficiently increases life expectancy - health facilities increases quality of life control of population
government expenditure on different levels of schooling
elementary education takes a major share. share of the higher/tertiary education is the least. expenditure per student in the tertiary sector is higher. the per capita public expenditure on elementary education differs considerably across states which leads to differences in educational opportunities.
expenditure on information
have to spend in order to get information relating to the labor market, education and health. information is necessary for making decisions regarding investments in human capital as well as for efficient utilization of the acquired human capital stock.
human capital and human development difference- meaning
hc- stock of a nation's skill and expertise over a particular point of time hd- it is the overall well being and development of a nation's human capital
human capital and human development difference- motive of investment
hc- to improve the efficiency and productivity hd- to improve the overall welfare
human capital and human development difference- means and ends
hc- treats human beings as a means to an end, the end being productivity. thus investment in health & education becomes unproductive if it does not enhance the output of goods & services hd- treats human beings as ends in themselves. thus basic education & health are important irrespective of their contribution to productivity.
human capital as mentioned in the seventh five year plan
human resources development (or human capital) has necessarily to be assigned a key role in any development strategy, particularly in a country with a large population. trained and educated on sound lines, a large population can itself become an asset in accelerating economic growth and in ensuring social change in desired directions
health expenditure
important input for the development of the nation and of an individual sickness leads to loss of productivity preventive medicine (vaccination ), curative medicines, social medicine, provision of clean drinking water, good sanitation are the various forms. directly increases the supply of healthy labor force.
sources of hcf
investment on education health expenditure expenditure regarding on-the-job training expenditure on migration expenditure on information
expenditure on migration
migrate mainly in search of jobs and better living standards. unemployment is the major reason for the rural urban migration. migration involves cost of transport, higher cost of living, psychic costs of living. the enhanced earnings in the new place outweigh the costs of migration.
few institutions coming under the health sector
ministries of health and its various departments indian council for medical research (icmr) indian medical association (ima)
differences between physical capital and human capital- basis of differences
on the basis of: physical construction separation building nature of benefits nature of depreciation mobility
expenditure regarding job training
on the job training refers to an arrangement where employees develop skills while they are working. done to save the organization from extra training costs and gives a working experience for the trainees. done either under the supervision of a skilled worker or by an off campus training. expenses incurred, which can be recovered by the benefits of increased productivity owing to the training, i.e. return is more than the cost
difference between physical capital formation and human capital formation: the process
physical capital formation is mainly an economic and technical process. it is the outcome of the conscious decision of the owner. human capital formation is partly a social process and partly a conscious decision of the possessor of human capital.
differences between physical capital and human capital- mobility
physical capital has complete mobility between countries, but subject to artificial trade restrictions. human capital is not perfectly mobile, it is restricted by nationality and culture
differences between physical capital and human capital- separation
physical capital is separable from its owners. human capital is inseparable from its owners, the owner of the human capital has to be present in the place of production
differences between physical capital and human capital- physical construction
physical capital is tangible and can be easily sold in the market, whereas human capital is intangible, it is endogenously built in the body and mind of its owner, only services can be sold.
physical capital
refers to land, buildings, equipment, computers and other properties which can be used for producing other goods and services.
Human Capital Formation
refers to the process of acquiring and increasing the number of persons who have skills, education and experience which are essential for the economic development of our country.
Human Capital
refers to the skill, knowledge and experience possessed by an individual or population viewed in terms of their value or cost to an organization or a country. refers to the stock of knowledge or skill embodied in the ability of human beings to perform labor and create economic value.
importance of health and education in hcf
the contribution of an educated person to economic growth is more than that of an illiterate person. education provides knowledge of scientific advancements that facilitates invention. a healthy person can provide uninterrupted labor for a longer time. both enhance labor productivity, stimulate innovation and help create newer technology
relation between human capital growth and per capita income
the human capital growth in developing countries has been faster than the growth of per capita income. But a close relation exists between the two. Higher income causes building of a high level of human capital and vice versa.
economic growth
the increase in the real national income of a country
few institutions coming under the education sector
the ministries of education and its various departments national council of educational research and training (ncert) university grants commission (ugc) all india council of technical education (aicte)