There are two standard ways of viewing the process of economic growth. One sees it as the outcome of capital formation and technological and organizational progress, including progress made possible by enlargement of scale; the other as a process of transformation in the use of a country's resources, principally in the size, intensity of use, and training of its labor force and its occupational and industrial structure. The two views are sometimes regarded as competitive, sometimes as supplementary. The truth is, however, that manpower development, capital formation, and technological progress are so closely allied and so interdependent as almost to confound analytical separation.

The purpose of this essay is to elaborate and illustrate the theme of interdependence and to sketch some of the main lines of connection between manpower development on the one side and capital formation and technological progress on the other. This is an expository paper, making no claim to originality. The factual assertions on which the argument depends mainly refer to the United States, although some have a wider application. For the most part, they are in the public domain, reducing the need to make a show of empirical support, but not guaranteeing accuracy. These notes are, therefore, provisional and, even in respect to their factual content, subject to verification.

Conventional versus total capital formation

The very distinction drawn between manpower development and capital formation rests in part on a conventional, but basically arbitrary, definition of the latter concept.