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what is the difference between physical and human capital?

Basis of Difference

Human Capital

Physical Capital

Consists of

It consists of the skill and knowledge of the human beings.

It includes all the physical tools and machinery used for production.

Nature

It is intangible in nature.

It is tangible in nature.

Wear and Tear

Human capital does not depreciate except the age which is renewed again with education and health.

While, physical capital is depreciated over time due to constant use.

Benefits

Human capital creates both private as well as social benefits.

Physical Capital creates only private benefits.

Mobility

Human capital has relatively restricted mobility due to cultural and nationality obstacles.

Physical capital is mobile.

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View Full Answer

Capital = Any resource necessary to produce a good.
Human capital is the labour required to directly contribute to the production of the good. (eg: An engineer in the production of a car, a sewer in a clothes factory.
Not familiar with the term 'physical capital' but the other form of capital is the contribution of innanimate objects in the production of a good (eg: a sewing machine, a drill, a hammer, a crane)

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Physical capital consists of all the means of production that go towards producing goods and services. This capital can be in the form of plants and machinery, or services. The product of physical capital goes towards satisfying the needs and requirements of human beings, otherwise known as the human capital. However, to be able to produce these goods and services, human beings must have acquired the necessary skills, experience and the technical know-how. Being the brain behind the effective use of physical capital, humans use acquired skills and expertise to produce the required output. Being the cause behind the physical output, human beings can be regarded as the human capital.

Mobility is one aspect that sets the human capital apart from physical capital. Today in the age of globalization, it has become easier to shift physical capital. Yet human capital remains tied to cultural and political boundaries, and is not that easy to move. However, the last decade, aided by advancements in transport, has seen a significant shift from this position.

Another aspect is the difference in the nature of depreciation faced by both. Human capital is depreciated by aging, but this can be reduced through investments in health and education.

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Human capital referes something which is not any form where we can touch or move like his expertise and wisdom knowledge..like doctor treats his patients by his knowledge and speciality these are few example of human capital. In contrary physical capital can be touched and felt just like plant and mchinery which is for longer period.

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Physical capital consists of all the means of production that go towards producing goods and services. This capital can be in the form of plants and machinery, or services. The product of physical capital goes towards satisfying the needs and requirements of human beings, otherwise known as the human capital. However, to be able to produce these goods and services, human beings must have acquired the necessary skills, experience and the technical know-how. Being the brain behind the effective use of physical capital, humans use acquired skills and expertise to produce the required output. Being the cause behind the physical output, human beings can be regarded as the human capital.

Mobility is one aspect that sets the human capital apart from physical capital. Today in the age of globalization, it has become easier to shift physical capital. Yet human capital remains tied to cultural and political boundaries, and is not that easy to move. However, the last decade, aided by advancements in transport, has seen a significant shift from this position.

Another aspect is the difference in the nature of depreciation faced by both. Human capital is depreciated by aging, but this can be reduced through investments in health and education.

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