Page 2 - Lesson Note

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
RESOURCE + CAPITAL

TRAINING 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.