Read the following statements - Assertion (A) and Reason (R):
Assertion: Physical capital formation can be built even through imports, whereas human capital formation is to be done through conscious policy formulations.
Reason: Physical capital is completely mobile between countries but human capital is not perfectly mobile.
From the given alternatives choose the correct one:

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

The correct answer is Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Assertion: Physical capital formation can be built even through imports, whereas human capital formation is to be done through conscious policy formulations. This is correct. Physical capital, such as machinery, equipment, and infrastructure, can be acquired through imports, while human capital, which includes knowledge, skills, and capabilities, requires conscious policy interventions such as investments in education, training, and healthcare.

Reason: Physical capital is completely mobile between countries but human capital is not perfectly mobile. This is also correct. Reason (R) is true because physical capital, such as machinery and equipment, is generally more mobile between countries compared to human capital. Machinery and equipment can be easily transferred through trade and investment. Conversely, human capital is not as easily transferable between countries.

The reason explains the assertion by contrasting the mobility of physical capital with that of human capital. Physical capital, such as machinery and equipment, can be easily transferred between countries through trade and investment. This mobility allows countries to acquire physical capital through imports, thereby contributing to physical capital formation. On the other hand, human capital, which includes knowledge, skills, and capabilities of individuals, is not as easily transferable between countries. Even though there might be migration of skilled individuals, it is not as straightforward as the transfer of physical capital. Therefore, conscious policy formulations are required to develop and enhance human capital, such as investments in education, training, and healthcare.

In summary, Reason (R) provides an explanation for Assertion (A) by emphasizing the mobility difference between physical and human capital, which influences how each type of capital is formed and acquired.