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Faster increase in population: The population of almost all developing countries in the world (including Pakistan) is increasing faster than the rate of accumulation of human capital. Human capital is an intangible asset or quality not listed on a company's balance sheet. As a result, these countries are not making satisfactory use of sector expenditure on education (which has accounted for 2.5% of LDC GDP over the last five years). ECONOMY & HUMAN CAPITAL Human Capital Formation is considered as a good indicator for economic growth and development. Human capital formation for Harnessing Demographic advantage* | NITI Aayog, (National Institution for Transforming India), Government of India by Leen Sawalha. These theories are concerned with human beings as inputs to increasing production". Harnessing Demographic Advantage and the youth power for nation building necessitates investment in quality education, health and skill Development. VI, Issue 4 August 2016 investing in education because they will pay less for social welfare programs and also it helps to prevent form crimes and the enforcement of laws. The importance of human capital is rising tremendously since the last few decades. Problems of human capital formation in LDCs include: 1. It can be classified as the economic value of a worker's experience and skills. Human capital is now regarded as the most important factor in an organization on the way to success. For example, the relationships forged through a mentorship program can lead to lines of communication between superiors and subordinates that never would have existed otherwise. In fact, nowadays talent is no longer dependent upon the employer but the employer is getting more dependent upon talent. C apital Formation: Capital formation is the process of building up the capital stock of a country through investing in productive plants and equipments. Human Capital Development: 4 Steps to Make it Work. Prior to the nineteenth century, systematic investment in human capital was not important in any country. Expenditures on schooling, on-the-job training, and other forms of investment were quite small. The Importance of Investment in Human Capital: Becker, Schultz and Heckman 4 Vol.

Capital formation, in other words, involves the increasing of capital assets by efficient utilization of the available and human resources of the country. Investing in your human capital can work to better communication by improving the quantity and quality of information passing up and down your business. Second, political participation and the quality of political decisions can be increased by increasing the level of education. The UN Human Development indices suggest that human capital is merely a means to the end of human development: "Theories of human capital formation and human resource development view human beings as means to increased income and wealth rather than as ends. According to classical economics, any organization, large or small, needs three types of resources to produce its goods and services; land, capital, and labor.

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