Chapter 30:

Population and Human Resource Development HDI, PQLI, HD Report,UNDP Report

Objectives:
After studying this lesson, you will be able to understand Meaning and Effects of Population Growth Various types of Effects on an economy Definition of human capital/resources Problems of human capital formation Criteria for investment in human capital Man power planning in developing economies 30.1 30.2 30.3 Introduction Definition of Effects of population growth Different types of Effects

30.3.1 Human capital 30.3.2 Meaning and Problems in human capital formation 30.3.3 Limitations for human capital formation 30.4 Criteria for Investment in human capital

30.4.1 The rate of return Criteria 30.4.2 The criterion of contribution of education to GNP 30.4.3 The residual factor Criterian The Composite Index Criterian Man power planning in LDCs 30.5 Summary 30.6 Check your Progress

30.7 30.8 30.9

Key Concepts Self-Assessment Questions Answers to check your progress

30.10 Suggested Readings 30.1 Introduction: The consequences of population growth on economic development have attracted the attention of economists ever since Adam Smith wrote his Wealth of Nations. There are different opinions on the rapid growth of population. It was Malthus and Ricardo who created an alarm about the effects of population growth on the economy but in Western Europe it led to its rapid industrialization, because such countries, wealthy, have abundant capital and scarcity of population. However, the consequences of population growth on the development of LDCs are not the same because the conditions prevailing in these countries are quite different from those the developed economies. These economies are poor, capital-scarce and labour abundant. Population growth adversely affects their economic development in the following ways. In LDCs the resources available for investment are limited, therefore, rapid population growth retards investment needed for higher future consumption. It tends to over use the countrys natural resources. With rapidly rising population, agricultural holdings become smaller and un-remunerative to cultivate. It leads to the overuse of the land thereby jeopardizing the welfare of future generations. Lastly with rapidly growing population, it becomes difficult to manage the adjustment that accompany economic and social change. Urbanization in LDCs creates such problems as housing, power, water, transport, etc., besides, growing population threatens permanent environmental damage through urbanization in some rural areas. Growth in population will have effect on several aspects related to economy such as: Per capita Income, Standard of Living, Agricultural development, Employment, Social Infrastructure, Labor Force, Capital formation, Environment. Rapid population growth also effects the LDCs in relation to the world economy in a number of ways. However, rapid population growth, whether it would have negative or positive effect on an economy is depend upon how best we utilize the human resources or capital effectively for economic development. The term human capital formation refers to the process of acquiring and increasing the number of persons who have the skills, education and experience which are critical for the economic and the political development of a country. Human capital formation thus associated with investment in man and his development as a creative and developing human resources1

According to Schultz, there are five was of developing human resources: (i) health facilities and services, broadly conceived to include all expenditures that affect the life expectancy, strength and stamina, and the vigour and vitality of the people; (ii) on-job training, including old type apprenticeships organized by firms; (iii) formally organized education at th elementary, secondary and higher levels; (iv) study programs for adults that are not organized by firms, including extension programs notably in agriculture; (v) migration of individuals and families to adjust to changing job opportunities In its wider sense, investment in human capital means expenditure on health, education and social services in general; and in its narrower sense, it implies expenditure on education and training. It has become conventional to talk about investment in human resources in its narrower sense because expenditure on education and training is capable of measurement as compared to the expenditure on social services. The notion of investment in human capital is of recent origin. Studies made by Schultz, Harbison, Dension, Kendrick, Abramovitz, Becker, Bowman, Kuznets and a host of other economists reveal that one of the important factors responsible for the rapid growth of the American economy has been the relatively increasing outlays on education. Economists are, therefore, of the view that it is the lack of investment in human capital that has been responsible for the slow growth of the LDCs. Unless such economies spread education, knowledge, and know-how, and raise the level of skills and physical efficiency of the people, the productivity of physical capital is reduced. PQLI: Morris has a criterion for measuring development is known as Physical Quality of Life Index. Three indicatorsLife expectancy, infant mortality and literacyhave been used to form a simple composite index (PQLI). For each indicator, the performance of individual country is rated on a scale of 1 to 100, where 1 represents the worst performance and 100 as the best performance by any country. For life expectancy, the upper limit of 100 was assigned 77 years (achieved in Sweden in 1973) and lower limit was assigned to 28 years (the life expectancy of Guinea Bissau in 1950). Within these limits, each countrys life expectancy is ranked from 1 to 100. The life expectancy falling between these limits of 77 and 28 is assigned the rating of 50. For infant mortality, the upper limit was set at 9 per 1000 (achieved by Sweden in 1973) and lower limit at 229 per 1000 (Taiwan 1950). Literacy rates measured as percentages from 1 to 100 provide their own direct scale. Once countrys performance in life expectancy, infant mortality and literacy have been rated on the scale of 1 to 100 the composite index (PQLI) for the country is calculated by a averaging the three ratings, giving equal weight age to each. Morris analysis reveals that countries with low per capita GNPs tend to have low PQLIs and countries with high per capita GNPs said to have high PQLIs, the correlation between GNP and PQLI are not substantially close. Some countries with high per capita GNPs had very low PQLIs while other countries with low per capita GNPs had PQLIs that were higher than the average for the upper middle-income countries.

The data seem to indicate that significant improvements in the basic quality of life can be achieved before there is any great increase in per capita GNP. Conversely, higher level of per capita GNP is not a guarantee of better quality of life. From the study of the table it can be observed that there are wide PQLI variations with similar level of per capita income such as Angola and Zimbabwe, China and India. Tanzania, and Zambia, Taiwan and Iraq, Costa Rica and Brazil. A particular striking contrast is that between Saudi Arabia and Sri Lanka.