Investment in Men Versus Investment in Machines: The Case of India

Abstract

This chapter attempts to evaluate the economic rate of return to society as a whole of investment in physical capital, on one hand, and of investment in secondary and higher education, on the other. The chapter deals exclusively with data from India. It goes into considerable methodological detail in an effort to indicate ways of making as good use as possible of data that are far from ideal. Poor data are characteristic of underdeveloped countries—indeed, the Indian data are probably better than those for the overwhelming bulk of poor countries. Part of my purpose in presenting this study is to help ‘break the ice’ by suggesting a variety of ways of overcoming potential inadequacies in the data. The other part of my purpose is to draw some inferences about the Indian situation.