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

Introduction

30.2

Definition of Effects of population growth

30.3

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

Key Concepts

30.8

Self-Assessment Questions

30.9 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.