Human Capital Formation: Trends, Implications and Future Prospects in China

Empirical evidence tells us that the prospects of sustained economic progress are dimmed or dampened by the coexistence of accelerated economic growth and income inequalities. It is possible to have a scenario where, despite the prevalence of sharp inequalities in the distribution of income there are improvements in the access that lower income groups have to social infrastructure. Not that such a situation is ideal but it is certainly less alarming than having increasing disparities in both the income and non income dimensions. Over the previous decade or so, China’s public services have been markedly inadequate and reduced accessibility to the poorer sections continues to be a problem. It was an irony that investments by local governments in production projects that would provide employment came at the expense of provisions in health care and education. Public expenditure on culture, education, science and health care declined from 3.8 per cent at the beginning of the 1980s to 2.8 per cent in 1994. Public expenditure on social services declined sharply from 31 per cent in 1978 to 13 per cent in 1994.