These two terms (Human Capital and Human Development) might sound quite easy and differentiable, but after completing the reading of the complete article I am pretty sure you would be surprised to know the basic difference these words have.
Talking in general Capital means an asset/ resource which one possesses be in terms of money, livestock etc. and Development means growth which can be qualitatively or quantitatively. Here as we are dealing with Human beings, so these two terms, in general, mean Human as a Resource and Human Growth.
Human Capital –
Just as we turn physical resources into physical capital ( for example – land is used for factories, agriculture farms), similarly human resources like students can be converted into human capital like engineers & doctors. These engineers and doctors add value to our lives and are thus called human capital. Interestingly, we need good human capital to produce good human capital ( for example, good professors who themselves are human capital are required to make good engineers and doctors).
Human Development –
Human Development refers to the growth of an individual physically or mentally through education, healthcare, training etc. Thus it is the process of creating Human Capital through various developmental activities and programmes like providing basic healthcare and educational services. It is a never-ending process and goes on till one dies. On Job Training, higher education, health facilities all lead to human development, ultimately creating human capital.
|Human beings thought of as resources who will add to profits/growth.||It refers more to the nurturing or building of an able human being wise enough to make valuable decisions.|
|Profit-oriented and seeks to achieve gains by using human as a resource.||Concerned with the welfare of an individual, more than the increase in end profit.|
|Considers education and health as means to increase the productivity of work.||Based on the idea that education and health are integral to human beings and only when people have the ability to read/write well and lead a healthy life, they can make valuable choices.|
|Considers human beings as means to achieve the end result. The result in an increase in productivity.||Here, Human beings are the end itself. The ultimate goal is the welfare of human beings themselves.|
|Thus here investment in health & education is unproductive if outputs don’t increase.||Here we believe that human welfare should be increased investment in health and education even if they don’t result in higher productivity.|
|Human Capital nurtures the Human Development process.||Human Development ultimately leads to making a good Human Capital. The more one invests on Human Development, leads to more good human capital creation.|
Ahh – Economics! One of the favourite subject. The thing which most of us like about economics is its practicality, uncertainty.There are no set of laws defined to do correct things, every day something new is coming. Everything here is variable and subject to one’s thinking can be right or wrong at the same time. (For example – Demonetisation in a country can be good or bad, we can’t predict before its actual implementation. It can do good by curbing the menace of black money or can be detrimental to the growth of the economy. It is up to an individual who might view it as good or bad based on his conscience or situation)
That is what economics offers you UNPREDICTABILITY & CURIOSITY to predict that unpredictable.
In a Nutshell (Summary):-
Thus we can conclude that these two terms ( Human Capital & Human Development) are inter-related to one another. Human Development occurs through spending in basic amenities like education, healthcare. The more we develop human beings, the more we convert them into Capital, that is as resources which can be used to achieve the desired result. In other words, Human Development is the process of creating value in work by developing able Human Capital