How is human resource different from other resources like land and physical capital?

Last Updated : 15 Apr, 2025

In an economy, the three fundamental components of production are human resources, land, and physical capital. The availability and efficient usage of these resources play a significant role in the economic growth and development of a nation. Human resources differ from land and physical capital in that they are intangible and have the ability to grow, learn, and create.

Human Resources

Human resources are the people who work for a firm or organization. They are seen as a great asset to an organization since they have the necessary knowledge, skills, and competence to carry out numerous jobs and responsibilities. Human resources include both skilled and unskilled workers, managers, executives, and other personnel who help the firm run smoothly.

Examples

Executives, managers, professional and unskilled workers, and administrative personnel are examples of firm employees.
Consultants are independent contractors who supply services to the company.
Trainers and coaches assist employees in improving their skills.
Consumers who offer comments on the company's products and services.

Land

Natural resources such as land, water, minerals, and forests are examples of land resources that are employed in the creation of goods and services. Several economic activities, such as agriculture, mining, forestry, and building, rely on land resources. These resources are finite and must be managed and conserved properly to ensure their long-term availability.

Examples

Agricultural land is used to grow crops and raise livestock.
Forests used for logging and animal conservation.
Body of water utilized for fishing, transportation, and recreation.
Gold, copper, and coal are examples of industrial minerals.

Physical Capital

Physical capital resources are tangible assets owned by a corporation or organization. Machinery, equipment, tools, buildings, and other physical infrastructure needed in the creation of goods and services are examples of these assets. Physical capital resources are necessary for an organization's efficient operation, and their optimal exploitation can lead to greater productivity, profitability, and competitiveness.

Examples

Computers, cars, and manufacturing tools are examples of machinery and equipment used in production.
Buildings utilized for business operations, such as factories, warehouses, and offices.
Roads, bridges, and power plants are examples of infrastructure used for transportation and energy generation.
Patents, copyrights, and trademarks are examples of intellectual property used to protect innovations and brand identification.

Human Resources Vs Land and Physical Capital

Resource	Definition	Examples	Key Characteristics
Land	Natural resources are found on or beneath the Earth's surface.	Forests, minerals, oil, and natural gas.	It is a fixed resource and cannot be created or destroyed.
Physical Capital	Tangible assets are used in the production of goods and services.	Machinery, equipment, buildings.	It can be created and destroyed, and its value depreciates over time
Human Resource	The knowledge, skills, and abilities of people are used to produce goods and services.	Labor, talent, education.	It is a flexible resource that can be developed and enhanced through education and training.

Key Differences

Human resources are malleable and may be developed and improved via education and training, whereas land and physical capital are not.
Human resources can think, make decisions, and innovate, whereas land and physical capital cannot.
Human resources can be transported from one area to another, while land and physical capital are not.
Only human resources have a direct impact on the quality of goods and services produced; land and physical capital have an indirect impact.

Conclusion

Resources like land and physical capital cannot compare to the tangibility, growth potential, and inherent value of human resources. They are an essential resource for economic growth and development, and their effective use can benefit society greatly.