The correct option is (a).
Explanation
Human Capital Formation is the process of transforming the people of a country into workers who are capable of producing goods and services. It involves investment in education, health, on-the-job training, migration, and information.
- Statement 1 is Correct: Human capital formation adds to the productive power of the country, similar to physical capital formation. Just as investment in machines increases physical productivity, investment in human skills and health increases labor productivity and overall economic output.
- Statement 2 is Incorrect: The accumulation of physical assets like machinery, factories, and buildings is referred to as Physical Capital Formation. Human Capital Formation refers to the stock of skill, ability, expertise, education, and knowledge embodied in the people.
- Statement 3 is Incorrect: Human Capital Formation does not view population growth as the sole factor for economic development. Instead, it emphasizes the quality of the population. Mere population growth without investment in education and health can be a liability; it becomes a resource (human capital) only when developed through specific investments.
Key Takeaway: Human Capital Formation distinguishes itself from physical capital by focusing on intangible assets like skills, knowledge, and health, which convert human resources into productive economic assets.