Human capital formation refers to the process of adding to the stock of human capital over time. Human capital is the economic value of a workers experience and skills, including assets like education, training, intelligence, skills, health, and personal resilience. The idea of human capital can be traced back to the 18th century, and it was suggested that improving human capital through training and education leads to a more profitable enterprise, which adds to the collective wealth of society.

Investing in human capital through nutrition, health care, quality education, jobs, and skills helps develop human capital, and this is key to ending extreme poverty and creating more inclusive societies. Human capital consists of the knowledge, skills, and health that people invest in and accumulate throughout their lives, enabling them to realize their potential as productive members of society.

Some examples of human capital include communication skills, education, technical skills, creativity, experience, problem-solving skills, mental health, and personal resilience. Human capital formation raises production levels and leads to economic growth by adding to the GDP. Knowledgeable and skilled workers can make better use of resources at their disposal.

The role and importance of human capital formation include:

• Higher productivity: Human capital formation raises production levels and leads to economic growth by adding to the GDP. Knowledgeable and skilled workers can make better use of resources at their disposal.

• Reduced poverty: Investing in human capital through nutrition, health care, quality education, jobs, and skills helps develop human capital, and this is key to ending extreme poverty and creating more inclusive societies.

• Improved quality of life: Quality of life is indicated by income and health, which depend upon the level of education, skill formation, etc. The formation of human capital increases these skills and improves the quality of life of the masses.

• Reduced human capital risk: Human capital risk refers to the gap between the human capital requirements of a company or organization and the existing human capital of its workforce. This gap can lead a company towards inefficiencies, inability to achieve its goals, a poor reputation, fraud, financial loss, and eventual closure. To reduce and eliminate human capital risk, an organization should train, foster, and support its workforce.

Sources of human capital formation include education, training, healthcare, and information regarding labor markets and other sectors. Human c...