Question

Investment in human capital is very similar to investing in physical capital. True or false? Explain your answer.

Answer 1

This statement is false

Human capital is different from physical capital in many ways. Accumulation of human capital is helpful in generating ideas which are then awarded as innovation. Accumulation of physical capital does not result in ideas. if there is an investment in human capital in the form of education and training, there is a positive spillover effect on other factors of production. no such spillover effect can be experienced under investment of physical capital.