The paper reviews the dynamics of human capital – mostly skills –accumulation and utilization during successful and static episodes of structural transformation in a sample of more than 90 countries over the last thirty years to identify cases when improvements in human capital are not met by skills demand - signaling an unbalance between investment in skills and other factors of production. A framework is proposed to differentiate inefficient skills investments by cases of over- and under-investment relative to skills demand, cases of skills underutilization, even at the right level of investment, and cases of skills mismatches due human capital’s misallocation across geographical areas and field of study. Based on country case studies, the paper examines the different forms of inefficient human capital accumulation and utilization and the potential market and policy failures that lead to such inefficiencies across individuals, firms, and governments. The framework is used to differentiate policy priorities depending on the constraints to efficient human capital accumulation and utilization and the stage of the structural transformation.