Which of the following statements about human capital and economic growth is NOT correct?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Human capital growth in developing countries has been slower than the growth of their per capita real income.
In developing countries, the measures of human capital have grown fast, but per capita real income has not grown as fast.
Option (1) The contribution of an educated person to economic growth is more than that of an illiterate person. — True. An educated person has more labour skill and generates more income.
Option (2) Health is a factor of economic growth, as a healthy person gives uninterrupted labour supply. — True. A healthy person can supply labour without breaks for a longer time.
Option (3) Human capital growth in developing countries has been slower than the growth of their per capita real income. — False. Human capital growth has been faster; income growth has been slower.
Option (4) The causality between human capital and economic growth can flow in either direction. — True. Higher income builds human capital, and more human capital raises income.
NCERT (2026-27): “Human Capital and Economic Growth: … Economic growth means the increase in real national income of a country; naturally, the contribution of the educated person to economic growth is more than that of an illiterate person. If a healthy person could provide uninterrupted labour supply for a longer period of time, then health is also an important factor for economic growth. …” “Human Capital and Economic Growth: … Empirical evidence to prove that increase in human capital causes economic growth is rather nebulous. This may be because of measurement problems. For example, education measured in terms of years of schooling, teacher-pupil ratio and enrolment rates may not reflect the quality of education; health services measured in monetary terms, life expectancy and mortality rates may not reflect the true health status of the people in a country. Using the indicators mentioned above, an analysis of improvement in education and health sectors and growth in real per capita income in both developing and developed countries shows that there is convergence in the measures of human capital but no sign of convergence of per capita real income. In other words, the human capital growth in developing countries has been faster but the growth of per capita real income has not been that fast. There are reasons to believe that the causality between human capital and economic growth flows in either directions. That is, higher income causes building of high level of human capital and vice versa, that is, high level of human capital causes growth of income. …” |