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NOTE: Gross national product (GNP) is an estimate of total value of all
the final products and services turned out in a given period by
the means of production owned by a country's residents.

HUMAN CAPITAL FORMATION

INVESTMENT
IN
EDUCATION
HUMAN
HUMAN + CAPITAL
TRAINING
RESOURCE FORMATION
+
MEDICAL
CARE

Note: Investment in human capital through education, training and
medical care yields a return just like investment in physical capital.

• Human capital is superior to other resources like land and physical
capital.

• Human resource can make use of land and capital

• Land and capital cannot be useful on its own.

CONSEQUENCES OF HUMAN CAPITAL FORMATION
• yields a return

• higher incomes
• higher productivity

• Not only do the more educated and the healthier people gain

through higher incomes, society also gains in other indirect ways
because the advantages of a more educated or a healthier

population spreads to those also who themselves were not directly

educated or given health care.