Q.(a)
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Start your 14-day free trial to unlock the full solution →Part (a): Human capital = intangible skills/knowledge in people; physical capital = tangible assets; sustainable development = meeting present needs without harming future generations.
Part (b): Micro-credit aids financial inclusion, women's empowerment and poverty reduction; one sustainable-development strategy is promoting renewable energy.
Part (a)
(i) Distinguish between human capital and physical capital
Physical capital is the stock of tangible, man-made assets used in production — factories, machines, tools, buildings and infrastructure. You can see it and touch it, and it wears out with use. Human capital is the stock of skills, knowledge, health and abilities that people possess. It is intangible, yet every bit as real in its productive power.
The key distinctions:
- Tangibility: Physical capital is tangible; human capital is intangible.
- Separability / ownership: Physical capital can be owned and traded separately from its user — a factory owner owns machines while workers operate them. Human capital is inseparable from the person; you cannot sell your knowledge and still keep it.
- Depreciation vs. appreciation: Physical capital depreciates with wear and tear. Human capital can appreciate with experience — a doctor of twenty years is more skilled than a fresh graduate.
- Mobility: Physical capital can be moved on its own; human capital moves only with the person who carries it.
- Role: Physical capital is a passive factor of production; human capital is the active factor that makes physical capital productive.
Investment in human capital (education, health) yields returns over a long period, and those returns are both private and social — an educated, healthy population benefits the whole economy.
(ii) Define Sustainable Development …
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