Activities that improve human capabilities [can be divided into] five major categories: (1) health facilities and services, broadly conceived to incl… - Theodore Schultz

The advance in knowledge and useful new factors based on such knowledge are all too frequently put aside as if they were not produced means of production but instead simply happened to occur over time. This view is as a rule implicit in the notion of technological change.

This branch of economics has suffered from several intellectual mistakes. The major mistake has been the presumption that standard economic theory is inadequate for understanding low income countries and that a separate economic theory is needed. Models developed for this purpose were widely acclaimed until it became evident that they were at best intellectual curiosities.

Much of what we call consumption constitutes investment in human capital. Direct expenditures on education, health, and internal migration to take advantage of better job opportunities are clear examples. Earnings foregone by mature students attending school and by workers acquiring on the-job training are equally clear examples.