PPT - Human Capital Formation in India Commerce Notes | EduRev

Economics Class 11

Created by: Pj Commerce Academy

Commerce : PPT - Human Capital Formation in India Commerce Notes | EduRev

 Page 3


Just as a country can turn physical resources 
like land into physical capital like factories, 
similarly it can also  turn human resources like 
students into engineers and doctors. 
Societies need sufficient human capital in 
the first place-In the form of competent 
people who have themselves been 
educated and trained as professors and 
other professionals. This means that we need 
investment in human capital out of human 
resources. 
Page 4


Just as a country can turn physical resources 
like land into physical capital like factories, 
similarly it can also  turn human resources like 
students into engineers and doctors. 
Societies need sufficient human capital in 
the first place-In the form of competent 
people who have themselves been 
educated and trained as professors and 
other professionals. This means that we need 
investment in human capital out of human 
resources. 
Points of Difference Physical Capital Human Capital
?Physical Construction It has physical 
construction. It can be 
seen, touched and easily 
sold.
It is intangible and it is not 
sold. Only its services are 
sold.
?Separation It is separable from its 
owners.
It cannot be separated 
from its owners.
?Building It can be built by imports 
also.
It is built by conscious 
policy formulation of 
state and its expenditure.
?Nature of Benefits It creates private benefit. It creates both private 
and social benefits.
?Mobility Completely mobile 
subject to artificial trade 
restriction placed at 
some places.
It is not perfectly mobile. 
It is restricted by 
nationality and culture.
Page 5


Just as a country can turn physical resources 
like land into physical capital like factories, 
similarly it can also  turn human resources like 
students into engineers and doctors. 
Societies need sufficient human capital in 
the first place-In the form of competent 
people who have themselves been 
educated and trained as professors and 
other professionals. This means that we need 
investment in human capital out of human 
resources. 
Points of Difference Physical Capital Human Capital
?Physical Construction It has physical 
construction. It can be 
seen, touched and easily 
sold.
It is intangible and it is not 
sold. Only its services are 
sold.
?Separation It is separable from its 
owners.
It cannot be separated 
from its owners.
?Building It can be built by imports 
also.
It is built by conscious 
policy formulation of 
state and its expenditure.
?Nature of Benefits It creates private benefit. It creates both private 
and social benefits.
?Mobility Completely mobile 
subject to artificial trade 
restriction placed at 
some places.
It is not perfectly mobile. 
It is restricted by 
nationality and culture.
Human Capital Human Development
Human capital consider 
education and health as a 
means to increase labour 
productivity.
Human development considers that 
education and health are integral to 
human well-being because only 
when people have the ability to read 
and write and the ability to lead a 
long and healthy life, they will be 
able to make other choices which 
they value.
Human capital treats human 
beings as a means to an end; the 
end being the increase in 
productivity. Any investment in 
education and health is 
unproductive if it does not 
enhance output of goods and 
services.
Human welfare should be increased 
through investments in education 
and health even if such investments 
do not result in higher labour 
productivity. Therefore, basic 
education and basic health are 
important in themselves, irrespective 
of their contribution to labour 
productivity.
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