Rural development, unending quest of developing country cannot be succeeded in deprived of human capital development. Human capital, the economic pillars of a country development appeals a policy based supports while fulfilling what is expected. Ethiopia, one of rural countries, with untouched and forgotten land and human force owe historical experiences of educational policy intending for mobilization of its citizen for advancement of overall economy. Rural Ethiopia as well has been the focus of those educational policies, considering the economic resources entrenched with in. In this literature review paper, Ethiopian educational policy and its contribution for human capital development, as well as its role for generating quality human labor force is assessed concisely. The author argues that the foundation of rural development such as technology, knowledge, infrastructure, market chain, communication and etc. can only be achieved through enhanced education policy that conciliate the existing reality of rural community. Ethiopia still needs an education policy which enables to generate a human capital that is oriented with the rural areas economic opportunities and challenges.

Keywords: Ethiopia, Rural Development, Human Capital development, Education policy.