Physical capital
Topic: Human Capital: Education, Health and Demographic Dividend · NCERT: Class 8, Ch 7 "Factors of Production"; Class 11, Ch 4 "Human Capital Formation in India"
Meaning
Physical capital means man-made, tangible (physically real) goods used to produce other goods, such as machines, tools, buses and factory buildings. It can be sold in the market like any commodity and is separable from its owner. It is fully mobile between countries, except where trade rules restrict it, so a country can build it up through imports. It wears out with use and can become obsolete as technology changes. It gives only private benefit, meaning the benefit goes to whoever pays for it. Class 11 says the idea of physical capital is the base for understanding human capital.
Example
A bus company in Pune can buy buses imported from abroad and later sell them. The owner does not need to be on the bus while it runs, but the driver must be present.
Don't confuse with
- Human capital: human capital is intangible and built into a person's body and mind. It cannot be separated from its owner, is not perfectly mobile, and gives social benefits as well as private ones.