Human Capital Formation

Mrs. S.Shanthi
Associate Professor, Dept of Economics,
Mount Carmel College. Bangalore
 Meaning of HCF
◼ Human capital formation as described by Professor Harrison as
''the process of acquiring and increasing the number of person
who have the skills, education and experience which are critical
for the economic and political development of a country.'‘

◼ Human capital formation is the act of increasing the productive

qualities of labour force by providing more education and by
increasing skills, health and notarization level.
 Importance of HCF
◼ Process of change
◼ Physical capital
◼ Rising general standard of living
◼ Greater Returns
◼ Removal of backwardness
◼ Existing resources yield larger output
◼ Mobility of labour
◼ Increase in the knowledge of the workers
◼ Use of modern technology
◼ Early stage of development
◼ For accelerating rate of economic growth
 Problems of HCF
◼ Population explosion
◼ Brian drain
◼ Lack of manpower planning
◼ Less attention on agricultural development
◼ Problem of measuring the growth rate of HCF
◼ Lowering of academic standards
◼ Problem of pattern of investment in education
◼ Problem to measure human capital
 Components of Human capital formation

◼ HCF which is a process of making investment on human resources to

make them productive resource involves the following components
◼ Health and nutrition
◼ Expansion of health facilities and nutrition programs contributes to HCF
in the following ways.
◼ Control of communicable diseases
◼ Diversified health care facilities and increase in medical stall
◼ Expansion of research and education
◼ Decline in death rate and infant mortality rate.
◼ Thus emphasis on health and nutrition are very important so as to make
people more productive and efficient i.e., improve quality of population.
◼ Education and training
Investment in education and training helps in developing a scientific
and rational attitude in society , widens the mental horizon and skills
of the people and helps in better and fuller utilization of the nation’s
resources.
◼ Housing and civic amenities
UDCs face a major housing problem which has 2 aspects to it –
quantitative and qualitative.
Quantitatively, there is an acute shortage of housing both in rural and
urban areas and qualitatively the sate of housing is miserable i.e., they
don’t have bathrooms, toilet etc.,
The housing problem has adversely affected the quality of life of the
population and made them inefficient and unproductive
◼ In addition to health and education housing facilities , citizens
require certain basic amenities like water supply, sanitation,
sewage and drainage , parks etc.,
◼ Civic amenities are not directly related to production but affect
productivity of the working force as a result of which production
suffers.
Thank you☺