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
