Human Capital Formation in India

Lesson

Part 1: what human capital is, how it is formed, and why it matters for growth and development.

In this lesson you will

Explain human capital, human capital formation and how human capital differs from physical capital
Explain the five sources of human capital formation with Indian examples
Analyse the two-way link between human capital and economic growth
Distinguish human capital from human development and assess India as a knowledge economy

Part 1 at a glance

Concept

What is human capital?

Human capital is the stock of skill, knowledge, expertise and health embodied in the people of a country at a point of time.

Both raise output; only one is built into people.
Kind of capital	Examples	Where it lives
Physical capital	Machines, tools, buildings, roads	Outside people; can be sold separately
Human capital	Skill, knowledge, expertise, good health	Inside people; goes wherever they go

Concept

Human capital formation is the process of adding to the stock of human capital over time.