Human capital and human development are terms that are used in economics for representing human resources. This is an important concept of economics, which deals with the way human resources are perceived by these terms.
Meaning of Human Capital
Human capital is referred to as the measure of the capabilities of labor which includes skills, working capacity, education, health and intelligence.
The concept of human capital focuses on the point that not all resources are equal, but with proper training and investment that gap can be fulfilled.
For a business, the skills, experience and education of an employee are extremely important, these create economic value for the business and economy as a whole.
Human capital is considered as important for business because they help in increasing the productivity which is responsible for profitability.
Therefore, according to human capital concept, by investing more in employees, a firm can become more profitable.
Also see:
- Sources and Problems of Human Capital Formation
- Meaning and Impact of Human Capital on Economic Growth
- Physical Capital Vs Human Capital
Meaning of Human Development
Human development is referred to as the process of expansion of the capabilities of humans in terms of abilities, rights.
The purpose of human development is to provide an appropriate environment for the people to enjoy a healthy, creative and long life.
The following points of differences between human capital and human development can be discussed
| Basis of Difference | Human Capital | Human Development |
| Concept | Human capital is a comparatively narrow concept | Human development is a comparatively broader concept |
| Central theme | It considers that health and education are the best means to improve the productivity of the labour force | It considers that health and education help in the overall development of the individual, as a healthy individual with proper education can take decisions that will help them lead a happy and healthy life |
| Welfare | In case of human capital, health and education are not useful as long as they do not result in improved productivity | Human development considers that human welfare is increased by having good health and proper education even if they do not result in any improvements in productivity |
Also read:Â Importance of Human Development Index
This completes the article on differences between human capital and human development. To read more of such interesting concepts on Economics, stay tuned to BYJU’S.
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