Here is Question No. 49 a part of our series on UPSC Prelims 2018
Q49. Consider the following statements: Human capital formation as a concept is better explained in terms of a process that 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?
(a) 1 and 2 only
(b) 2 only
(c) 2 and 4 only
(d) 1, 3 and 4 only
Answer: C
- Human Capital can be defined as the economic value of an individual’s skills, abilities, knowledge, or experience, etc.
- Statement 1 is not correct: This is Gross Capital Formation (GCF) representing physical capital.
- Statement 2 is correct: According to the OECD, human capital is defined as: “the knowledge, skills, competencies and other attributes embodied in individuals or groups of individuals acquired during their life and used to produce goods, services or ideas in market circumstances”.
- Statement 3 is not correct: Human Capital Formation relates to the enhancement in the abilities of humans as a resource in himself/herself and not the accumulation of tangible wealth like land, money, etc. Tangible wealth is related to assets that can be seen and touched like gold, land, etc. However, these form the part of economic capital and not human capital. Tangible capital is also GCF is which involves largely infrastructural components.
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