Human Capital Formation-
Human capital formation refers to the process of accumulation of the stock of people who possess the required skill, education, knowledge and expertise and hence in turn, heps in the production processes. In other words, the term 'human capital formation' refers to the increase in the stocks of human capital, that is, the stock of skilled and capable people of a particular country over a period of time. Economic development of a country requires the proper and optimum utilization of both human capital and physical capital.
Human Capital -
The term 'human capital' refers to the stock of skills, knowledge, education and expertise of people of a particular country at a given period of time.
Physical Capital -
The term 'physical capital' refers to all those inputs that helps in the production processes, namely plant and machinery, building, factory, etc.
Sources of Human Capital Formation:-
The various sources of human capital formation are -
a. Expenditure on education
b. Expenditure on health
c. On-the-Job training
d. Expenditure on migration
e. Expenditure on acquiring information
Importance of Human Capital Formation:-
Human capital formation is of utmost importance due to -
a. It increases production and productivity.
b. It leads to control of high population growth rate.
c. It improves the quality of life.
d. It increases life expectancy.
e. It leads to effective and optimum utisilation of physical capital.
Problems faced by Human Capital Formation:-
The main problems faced by human capital formation are given below-
a. Insufficient resources
b. Raising population i.e. high growth rate of population
c. Brain-drain
d. Insufficient manpower management
e. Lack of proper on the job training in agricultural sector
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