Correct Option
The correct option is It can be built through imports..
Explanation
Physical Capital refers to tangible assets used in production, such as machinery, factories, and tools. Human Capital refers to the stock of skills, knowledge, expertise, and health embodied in the people of a nation. While both contribute to economic growth, they differ fundamentally in their formation and tradability.
Statement-wise Analysis
- It depreciates with time. is Incorrect: Depreciation applies to both. Physical capital depreciates due to regular wear and tear. Human capital depreciates due to aging and the obsolescence of skills, although this can be mitigated through continuous training and healthcare.
- It can be built through imports. is Correct: Physical capital is a tangible commodity that can be directly built through imports (e.g., buying technology or machines from abroad). Human capital, being intangible and inseparable from the owner, cannot be "imported" like a commodity. Its formation is a long-term social process requiring conscious policy interventions in education and health.
- It is an outcome of investment decisions. is Incorrect: Both forms of capital are the result of conscious investment decisions. Physical capital requires financial investment, while human capital requires investment in education, training, and health.
- It increases future income. is Incorrect: The primary purpose of accumulating both physical and human capital is to enhance productivity and increase future income streams.
Key Takeaway
Physical Capital is tangible, mobile, and can be instantly accumulated through imports. Human Capital is intangible, inseparable from its owner, and must be developed over time through internal social processes (education and health).