The paramount concern of this study is to define role of motivation for human capital and evaluate its impacts on trade values for twenty seven developed and developing countries for the period of 2000 to 2013. Utilizing psycho-social indicators, the study constructs Human Capability Index to measure the role of human capital in trade. Empirically gravity model is employed to determine the role of human capability into functioning and its role in bilateral trade flows. Quality of products referred to the level of technology used in production and categorized as high, medium, and low technology. In recent studies, the role of human capital in bilateral trade flow is captured through utilizing TAI (Technology Achievements Index). This index captures the outcomes of human capital in the form of innovations and technological advancement. This study introduce HCI to capture the potential of human capital and analyze its relative role to TAI in explaining impact of human capital in defining level of bilateral trade flows among countries. Impact of HCI is measured through utilizing typical gravity model and analyzed its role relative to TAI and other variables traditionally used in the model. Employing PPML technique, this study analyzes the independent and relative role of HCI and TAI. HCI incorporates psycho-social factors which directly influence human behavior and productivity whereas; TAI utilizes traditional indicators to capture outcome of human capital. This study analyzes the impact of HCI and TAI in defining bilateral trade flows for countries at different levels of endowments. Estimation of typical gravity model with its traditional control variables confirms that HCI captures more fundamental aspects of human capital relative to TAI. It leads the study to conclude that in order to enhance bilateral trade flows between developed and developing group of countries one cannot ignores the importance of psycho-social factors Supervisor:- Dr. Attiya Yasmin Javid