ЦИРЭ: Центр исследований региональной экономики

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Yury Korchagin.


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The human capital (HC) has a cost. The human capital continuously updates, develops and modernizes itself like any other capital (physical, natural, financial). The key indicators to measure the HC are a cost and an efficiency (рroductivity) as a factor of the intensive development. The key indicators to measure the HC are the cost and the efficiency (рroductivity) as a factor of intensive development.

HC has all the properties and the characteristics of an intensive factor of the development, but there are some problems with accurate measurement of its the cost and the performance. These problems are associated with the vagueness of the definition of multi-element, compound and complex HC. And the dependence of its quality and, consequently, performance on many parameters and the indicators that can be characterized by one or another nation, country or other subject (region, organization, household, individual).

In addition, there exist ethical problems with using the full concept of "capital" in relation to a man, people to people, to the nation. Economic category of "human capital" inevitably leads to a strong separation of peoples and nations on key dimensions - the efficiency and quality of the HC.

At the same time, is widely used today by international institutions, the UN human development index (HDI) drastically eliminates these differences. In this - the main difference between the HDI and index of efficiency HC.

The human capital - is an intensive and complex factor of the development of economy and society, including human resources, knowledge, tools of intellectual and organizational labor, environment and intellectual activities, to ensure effective and efficient functioning of the HC as a productive factor of development.

Briefly: the human capital - are professionals, intelligence, knowledge, qualitative and high-efficiency labor and quality of life.

The national human capital is substantially different in quality and cost per capita, as well as on its effectiveness for different countries. These indicators HC depends on the quality and ethics of labor, that have historically determined by the degree of economic freedom and mentality.

The Economic freedom of the country at the present time is measured by the international index of economic freedom, which, in turn, is calculated for 10 composite indicators, mainly reflecting the quality of labor, business and government.

The Relationship of human capital (HC) on investments is determined by

HC = f(j,q,I,X) = cI ,                  (1)

where j - the index of quality of labor in the broad definition, q - index of quality gained HC, I - investments in HC, X - other variables from which depends HC, including itself accumulated HC.

The index of transformation investments in human capital c determines numerically the efficiency or productivity HC. The value of c can be greater than 1 (for the most developed countries with the highest quality of HC, with the innovation economy, economics of knowledge, information society) and less than 1 for developing and underdeveloped countries. For countries with defective labor and low productivity of its c is several times lower than that of developed countries, as well as productivity.

The index of transformation investments in HC - reflects the total efficiency of HC, which in turn determines the average productivity in industries with high added value and knowledge production (industries with high technology, scientific production, innovation, new technologies, production of high technologies).

The efficiency of HC c reflects how many units of HC can be obtained per unit of investment in this country. The number of these units (the numerical value of c) is mainly determined by the integrated efficiency accumulated national HC.

The effectiveness of accumulated human capital c is defined

c = 0,5(j + q)k               (2)

k = (GDP - Exports of natural products ) / GDP               (3)

where k - the index of natural economy (oil, gas and all), reflecting the natural nature of poorly diversified and backward economy, suffering from "Dutch disease". GDP and exports of primary products are determined by the current exchange rate. Numerical coefficient of 0.5 reflects equal specific gravities of labor j in its broader definition and the specific gravities of index quality of accumulated human capital q.

The index of labor j, in a broader definition of labor, reflects the economic freedom, including ethics and working conditions, ethics and conditions of business, the mentality of the people, the efficiency in this sector of the state institutions.

The index q of gained national HC reflects the efficiency of qualified labor, the creative and constructive power of the already accumulated HC. Indices j and q are formulas with equal weights.

The index of labor in the work / 1,2 / in its broadest sense is defined as

j = T L B P ,                  (4)

where T the index of the traditions; L- the index of the quality of labor; B - the index of the quality of business; P - the index, that reflects the law-abiding people (or legal nihilism).

Widely known and used in international practice the normalized index of economic freedom (Index of Economic Freedom, IEF), as shown by analysis and calculations, to reflect on the merits and numerically the set of partial coefficients of (3). Therefore, in order to simplify the calculations, increasing their reliability and representativeness in the formula (2) used an international index of IEF / 3 /.

The Index of Economic Freedom is calculated based on 10 sub-indices: business Freedom, the Freedom of commerce, Fiscal freedom, government Expenses, Freedom of the prices, Freedom of investments, Freedom of financial sector, Protection of the property rights, Level of corruption and labor market Freedom. All these indicators are connected with characteristics and quality of country conditions for labor and business, and, therefore, they determine the investment attractiveness of the country.

The value of each indicator varies from 0 to 100 points (100 points means the maximum level of economic freedom). In fact, subindexes reflects the ethics, quality and productivity (including labor entrepreneurial, managerial, administrative and intellectual) and the conditions for its free and effective realization. Therefore, the IEF index is used for calculations in fractions of an unit index of economic freedom, which greatly simplifies the calculations (IEF index is shares on 100).

j = IEF/100.              (5)

The index of quality HC unites influence on index of efficiency HC another group of subindexes (factors).

q = lhsie ,               (6)

where l - the index of quality of life of the population, h - index inflows HC from the outside the subject (the outflow from it); s - the index of science and synergy; i - the human development index (HDI); e - the index of the effectiveness of the national elite.

The index of inflow HC is

h = (initial number of scientists + inflow (- outflow) scientists)/initial number of scientists. (7)

The index of science and synergetrics

s = (1+10n + w),                 (7)

where n - the gross domestic investment in science as a fraction of GDP, w - the country's share in the total world investment in science.

The index of efficiency of the national elite

e = (GDP - the informal sector of economics) /GDP.             (8)

Thus, to calculate the index efficiency of HC used the indices of international organizations: the index of economic freedom (Index of Economic Freedom, IEF); the index of quality of life (QL); Human Development Index (HDI); as well as the index of science and synergetics, calculated according to a report by UNESCO for 2010 y.; the index inflows HC outside of the subject (the outflow from it); the index of quality gained HC (calculation of it - on a group of indicators and indices), the index of the effectiveness of the elite and the shadow economy; the index of resource economics.

The calculations of the effectiveness of the HC in a large number of indicators reflect the quality and the efficiency of HC, as well as the average labor productivity of the country or another entity. HDI, in contrast, smooths out through a small number of indicators (three) and the geometric mean of these differences in the quality and efficiency of HC countries.

For example, in 2010 y. (year of publication) of HDI U.S. - 0,902, and Russia - 0.719 (difference – 20%). Of course, this doesn't reflect any the gap between the countries on the human potential and the per capita cost (and the productivity) of the national HC in these countries.

The value index HC efficiency is completely different: the index of the U.S. to 4.1 times higher than Russia, which is close to the ratio of the average labor productivity in these countries (table 1).

The main deficiency of the HDI is that this index does not reflect the quality of education and quality of per capita GDP. In the developed countries the quality and the cost of education is much higher than in poor or developing countries. A large proportion of oil and gas industry and the income from it pushes up in the ranking of the HDI, for example, oil-producing Arab countries. And these countries almost do not involve its national HC even in the production of oil and gas. Therefore, to account for higher export earnings when calculating the effectiveness of national HC of commodity-dependent economies use reduction factor. It is, in particular, for Russia - 0.75, for Kazakhstan – 0.56. For the developed countries and the developing countries with the diversified economies, the index is 1.

Table 1. Index of the efficiency of the human capital


of Economy

of efficiency

of raw

Freedom (IEF)








United Kingdom



















with foci






with foci























The level of corruption and criminalization of the national human capital is taken into account by the sub-index of all the major indexes: IEF, QL, the index of quality the elite and the shadow economy, the index of the flow of HC and others.

The basic reasons for the low indices of the efficiency and the quality of HC in Russia and Kazakhstan - a substantial proportion of the passive and negative HC, a low investment in HC, the high corruption and criminalization of the country.

The literature

1. Korchagin J.A. human the capital of Russia and other countries: estimations of efficiency of investments in HC. http://www.lerc.ru/?part=articles&art=3&page=18
2.Korchagin J.A. Three the basic problems of Russia, its regions and mechanisms of their decision. – The monography. - Voronezh: ЦИРЭ, 2007, 144p. http://www.lerc.ru/?part=books&art=9


4.Yury Korchagin. Efficiency and quality of national human capitals of the countries of the world. http://www.lerc.ru/?part=bulletin&art=38&page=1
5.Корчагин Ю. А. Российский человеческий капитал: фактор развития или деградации? - Воронеж: ЦИРЭ, 2005.

Korchagin Y.A. Russian human capital: a factor in the development or degradation? - Voronezh, 2005.

6.Korchagin YA Human capital, the nature, evolution and role in the economy.
7.Корчагин Ю.А. Современная экономика России. - Ростов-на-Дону: Феникс. Изд. 2, 2008.

Korchagin Y.A. The modern economy of Russia. - Rostov-na-Donu: Feniks, 2008.

8. Корчагин Юрий. Циклы развития человеческого капитала как драйверы инновационных волн.

Yury Korchagin. Cycles of development of human capital as drivers of innovation waves.

9.Корчагин Юрий. Эффективность и качество национальных человеческих капиталов стран мира».

Korchagin Yury. Efficiency and quality of national human capital of the world.

10.Корчагин Юрий. Широкое понятие человеческого капитала.

Korchagin Yury. Broad concept of human capital.

11.Другие работы о человеческом капитале.

Other publicationson human capital. http://www.lerc.ru/







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