What is Human Capital Formation?
To produce more human capital from resources, we need to invest in human capital. The process of adding to the stock of human capital over time is known as Human Capital Formation. In other words, Human capital formation is the process of acquiring and expanding the number of competent, educated, and experienced people who are essential to the country’s economic, social, and political development. Thus, human capital formation is associated with an investment in human beings and their development as a creative and productive resources.
For example, if at the beginning of the year, a country’s human capital stock includes 40 lakh skilled workers and at the end, it increases to 45 lakh skilled workers, then there is human capital formation to the extent of 5 lakh skilled workers in a year.
Human Capital Formation: Meaning, Sources, Role and Importance
If seen from the economic development point of view, human resources are important. In today’s world, it is believed that to build a strong nation, it is essential to focus on the development of people and the organisation of human activity. Here, the development of human resources refers to the increase in the quality of human beings to help in the growth process and development of the country.
According to Prof. Whipple, ‘A nation’s true wealth is neither in its land and water, nor in forests and mines, nor in its flock and herds, nor in dollars, but in its wealthy and happy men, women, and children.’
Table of Content
- How do people become resources?
- What is Human Capital?
- What is Human Capital Formation?
- Sources of Human Capital Formation
- Role and Importance of Human Capital Formation
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