Abstract
In current thinking, human capital is referred to as a driver of national economies. It encompasses all of the knowledge, talents, skills, abilities, experience, intelligence, and training of a country's workforce. National governments are fully aware of this, and they are seeking to stimulate human capital and encourage its development. A number of studies have shown that public investment for developing human capital is claimed to be the highest performing investment for achieving better economic performance. The aim of this paper is to verify whether government investment in areas that develop human capital can indeed aid its development in the Czech Republic. Using the least squares method, the paper studies whether the Human Development Index showed correlation to individual types of government expenditure between 1995 and 2017. The analysis revealed that in the Czech Republic, spending on recreation, culture, and religion had the largest influence on developing human capital for the period under review. Expenditure on education and health, which most studies cite as the main tools for cultivating human capital, placed only third or fourth regarding their contribution to developing human capital.
Highlights
Human capital, as measured by level of education, is commonly considered to be one of the key variables supporting economic growth (Frank, 1960; Mincer, 1984; Casey & Christ, 2005; Westlund et al, 2010)
Particular attention has been paid to the impact of expenditure on economic sectors that, based on the literature review, cultivate human capital; this public spending should be reflected in the country's human capital development
The variables used in the analysis are the Human Development Index and the Classification of the Functions of Government in the Czech Republic
Summary
As measured by level of education, is commonly considered to be one of the key variables supporting economic growth (Frank, 1960; Mincer, 1984; Casey & Christ, 2005; Westlund et al, 2010). Investment in human capital is considered to be one of the most important types of investment, providing the highest rate of return in terms of output. Growth models such as those by Romer (1972) and Lucas (1988) – in the wake of Razin (1972), and Uzawa (1965) – emphasize investment in human capital as an important factor contributing to longterm growth. Florida (2002, 2005) introduced a new theory of regional economic growth based on the role of the creative class, composed of creative and innovative workers and characterized by high levels of productivity. Creating a creative workforce is considered a collective process, having overturned the romantic view of creative genius – once considered a gift from the gods and uninfluenced by the surrounding social context
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