How human capital formation can overcome the problems of underdeveloped countries.

Or

Explain the importaant role of human capital formation in the process of development?

Human capital formation is crucial for the removal of backwardness of the underdeveloped countries in following ways.

(i) It can play an important role in making the existing resource yield? output by impriving upon the labour efficiency.

(ii) It can help increase the mobility of laboure force so that they can get better jobs and increase in income.

(iii) It can help to increase the knowledge of the worker.

(iv) It can help in the removal of backwardness in underdeveloped countries through use of modern technology.

(v) In underdeveloped countries human capital formation is of special significance at the early stage of development when physical capital formation is more urgently needed, in contrast to the experience of developed countries which require human capital formation at later stage of their progress.

(vi) It helps in creating the necessary skills in a man as a productive resources and providing him gainful employment.

Investment in human capital formation is also important for accelerating the rate of economic growth in underdeveloped countries and for maximum utilisation of capital (man-made) and non-capital (natural) resource of the economy.