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Question
Bring out the differences between human capital and human development.
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Solution 1
Human capital and human development are interrelated concepts, but they are not identical. While human capital refers to the stock of a nation’s human skills and expertise at a particular point in time, human development refers to the holistic development and well-being of a nation’s human capital. On one hand, human capital considers education and health as a means (skills and expertise) to enhance productive capacity; on the other hand, human development considers human beings as an end in themselves. The important difference between human capital and human development is associated with the difference in the motive of investment. While human capital focuses on the investment in education and the health sector to increase productivity and efficiency of the workforce, on the other hand, human development focuses on investment in education and the health sector to increase the general well-being and standard and quality of living of the human capital. If the investment fails to increase the efficiency and income-earning capacity, then human capital regards the investment as unproductive. But, human development advocates in favour of such investments even though these have failed to bring out higher productivity and efficiency. Human development protects every individual’s right to get an education and lead a healthy life.
Solution 2
| Human capital | Human development |
| Human capital is a narrow concept. | Human development is a broad concept. |
| It states education and health as a means to increase labour productivity | It states that education and health are integral to human well-being because only when people can read and write do they have the ability to make a healthy life |
| It treats human beings as a means to an end, the end being the increase in productivity | It is an end in itself |
| It considers that investment in education and health is unproductive if it does not increase the output of goods and services. | It holds that human welfare should be increased through investments in education and health, provided such investments do not increase labour productivity. |
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