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Write your comments on:
(i) Capital formation and technological progress
(ii) Capital formation and employment generation.

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(i) Capital Formation and Technological Progress : Capital accumulation makes possible technological progress of the economy. Different technologies require different types of capital goods. Therefore, when new, better and more efficient technology is invented, then it can be used for production, if this technique is suitable for capital goods, then it is according to that technique capital goods are formed. Therefore, no technical progress can be made without capital accumulation. If there is no capital accumulation, then various new inventions and discoveries will lie unused for production. Therefore, it is clear that capital accumulation promotes technological progress in the country and through this it accelerates the economic development of a country.

(ii) Capital Formation and Employment Generation : Another important role of capital formation is the creation of employment opportunities in the country. Capital formation creates employment in two phases. First of all, when capital is produced, then some workers are employed to create capital like machinery, factories, dams, irrigation works, etc. Secondly, more men will be employed, when capital is used to produce other goods. In other words, many workers have to be engaged in the production of goods with the help of machines, factories, etc. Therefore, one sees that the employment will increase because the economy of capital formation has increased.

Now, if population increases sharply as compared to the increase in capital stock, then, labour force cannot be employed in production work because they will not have enough equipment for employment. It is to reduce unemployment that the rate of capital formation should be kept high enough to increase employment opportunities by linking the work force of the country to production.

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