Physical Capital vs Human Capital

What is Physical Capital?

In economics, the term ‘physical capital’ is used to indicate the data (factor of product) or man-made commodities, which are maintained by the firm such as machinery, computers, tools, equipment and many more. It is used in the manufacturing procedure to allow the change of raw material into finished goods.

When a person wants to begin a firm, a large amount of physical capital is funded in the primary stage, so that the organisation can mark its presence in the market.

What is Human Capital?

Human Capital implies the knowledge which a worker brings to the company in the manner of education, talents, abilities, talents, knowledge, preferences etc., which he or she has gathered over time. As a consequence, the employees are regarded as an asset, whose value can be enhanced, by spending in their coaching and improvement, like any other asset of the firm.

The notion makes it obvious that all the workers at the job, are unequal and they contrast in their skillfulness.

This article is a ready reckoner for all the students to learn the difference between Physical Capital and Human Capital.

Basis Physical Capital Human Capital
Meaning The term ‘physical capital’ is used to indicate the data (factor of product) or man-made commodities, which are maintained by the firm such as machinery, computers, tools, equipment and many more. It is used in the manufacturing procedure to allow the change of raw material into finished goods. Human Capital implies the knowledge which a worker brings to the company in the manner of education, talents, abilities, talents, knowledge, preferences etc., which he or she has gathered over time. As a consequence, the employees are regarded as an asset, whose value can be enhanced, by spending in their coaching and improvement, like any other asset of the firm.
Nature Tangible Intangible
Formation Technical and economic procedure Conscious ascertainment and social process
Tradability Can be traded in the marketplace. Services rendered by the human capital can be sold.
Separability Can be separable from its owner. Cannot be separable from its owner.
Financial Statement Shown Not shown
Restriction on Mobility Befalls due to trade restrictions Befalls out of nationality and culture
Nature of Depreciation Regular usage, results in depreciation Ageing leads to depreciation, but it can be reduced.

The above mentioned is the concept, that is elucidated in detail about ‘Difference between Physical Capital and Human Capital’ for the Commerce students. To know more, stay tuned to BYJU’S.

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