One of my past work responsibilities included health education (for future teachers). One of the most important topics of the semester was self-esteem vs. self-efficacy. Parents and teachers absolutely need to understand these concepts well in order to help children develop in both of these ways.
Self-esteem is, simply put, feeling worthy of love. We get it mostly from the early relationships in our lives. When parents and other care givers regularly provide loving words and loving touches, children understand that they are loveable people – and that they should expect to be treated well by those that profess to love them, as they progress through life.
One additional vehicle that we humans can use to learn about relationships is high quality children's literature. Contemporary realism can be particularly useful, but relationships can figure prominently in other kinds of books, too. One particularly delightful series (for young children) that comes to mind is Russell and Lillian Hoban's Frances books. Talk about opportunities to discuss relationships!
Self-efficacy is something different; it is a sense of confidence that allows us to feel that we could be successful in trying new things. It comes from previous new experiences and successes.
When we help children to develop a strong sense of self-efficacy, we have lots of chances to help them see firsthand that practice yields good results. We can use specific words of encouragement to point out the ways in which a child's practice has made a difference in his/her performance. We might say something like, "I see that your drawings are getting more and more detailed." On another occasion, we might say, "I've noticed that the more free throws you attempt, the closer you're getting to hitting your shots."
Another thing to keep in mind when considering ways to help a child develop a strong sense of self-efficacy is that it's very important to provide a steady stream of new experiences/areas of exploration. These could be play opportunities, increasingly complex chores, musical training, etc.
As children grow, they will come to have preferences of their own – and will naturally spend more and more time on their favorite pursuits. This may well result in bona fide expertise for them, and that expertise will contribute greatly to their general belief that they can be successful in other areas.
This "snowball" of (appropriate) confidence can manifest itself in both ambitious career and recreational choices in adulthood. It's the stuff of life satisfaction (especially when combined with the ability to enter into and sustain loving relationships, the result of good self-esteem – as described above).
Good news for adults: Even though we are physically grown, we can improve in both of these areas, ourselves. We can cultivate our self-esteem by putting energy into the development of better and better relationships with those we love. We can grow our self-efficacy by undertaking a new skill – and practicing until we achieve some competence. The healthier we are in these two ways, the better prepared we will be to assist the children in our care in getting there themselves, right?