this difference is very important and is attributable to the human capital associated with traditional skills and knowledge not obtained through attending educational institutions in this chapter we discuss both human capital accumulated through formal schooling and human capital based on local and indigenous knowledge lik certainly measuring the latter is a more challenging task given the difficulty of quantifying the value and scope of lik it is worth noting that the lack of one eg formal education may be partially compensated albeit indirectly by another lik in terms of human development first human capital is the most important ingredient in the knowledge sector which includes technologically advanced industries and services eg information technology high tech manufacturing financial services etc