What Is the Relationship between Human Capital and Human Development?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 01 December 2019
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The relationship between human capital and human development is the fact that any human capital investment has the effect of leading to human development. In other words, human capital is a facilitator of human development. Human capital refers to all of those factors capable of leading to an improvement in the experience, knowledge, health and morals of a person. Such human capital can be deposited through both informal and formal means of training and education of people as well as through different means of healthcare aimed at maintaining good health.

Human capital and human development are linked by the way in which increases in human capital allow an individual to create a better life. For example, someone who is trained to be an engineer has been deposited with the human capital he or she can use to earn a living. By using the skills learned and honed as part of the human capital improvement process, this person will create conditions that will further facilitate development through the ability to earn money as well as to live an independent and comfortable life. People who undergo further training at work as part of their human capital investment will also be able to increase their earning potentials. While these benefits are on an individual basis, human capital and human development are also linked in a more general way.


Someone who has a wealth of human capital can use this repertoire of knowledge, not just for his or her own human development, but for the development of the community and even the world at large. Examples are highly trained scientists who use their knowledge, experience and training to develop vaccines and cures for various forms of diseases. This is a direct link between human capital and human development because such medicine can help in the prevention and treatment of different types of diseases.

In the same sense, people with intensive human capital investment can also use the knowledge in the development of the community in fields like economics, engineering, arts and law. All of these contributions to the society help to move it forward and are the outcome of the human capital input in the individuals. Also, the instillation of good morals in individuals shows a link between human capital and human development, because such an investment helps in the reduction of criminal tendencies and the in prevention of the degradation of the society.


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