The two terms sound similar but there is a clear distinction between them.

Difference Between Human Capital and Human Development

Human capital considers education and health as a means to increase labour productivity.

  • Human capital treats human beings as a means to an end; the end is  the increase in productivity. In this view, any investment in education and health is unproductive if it does not enhance output of goods and services.
  • It is a comparatively narrow concept.
  • Can be measured individually

Human development is based on the idea that education and health are integral to human well-being because only when people have the ability to read and write and the ability to lead a long and healthy life, they will be able to make other choices that they value.

  • In the human development perspective, human beings are ends in themselves. Human welfare should be increased through investments in education and health even if such investments do not result in higher labour productivity. Therefore, basic education and basic health are important in themselves, irrespective of their contribution to labour productivity. In such a view, every individual has a right to get basic education and basic health care, that is, every individual has a right to be literate and lead a healthy life.
  • It is a comparatively broader concept.
  • Can be measured using Human Development Index (HDI)

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