Prelims 2018 · Economy · Question 49
Consider the following statements: Human capital formation as a concept is better explained in terms of a process which enables
- individuals of a country to accumulate more capital.
- increasing the knowledge, skill levels and capacities of the people of the country.
- accumulation of tangible wealth.
- accumulation of intangible wealth.
Which of the statements given above is/are correct?
Answer
2 and 4
1. Individuals of a country to accumulate more capital — Human capital formation is not about people accumulating financial/physical capital; it is about improving people themselves through education, health and training. Verdict: Incorrect.
2. Increasing the knowledge, skill levels and capacities of the people of the country — This is the core meaning of human capital formation. Verdict: Correct.
3. Accumulation of tangible wealth — Tangible wealth means physical assets; that is not human capital. Verdict: Incorrect.
4. Accumulation of intangible wealth — Human capital is an intangible asset embodied in people, such as skills, knowledge and abilities. Verdict: Correct.
Therefore, statements 2 and 4 are correct.