Know-How and Human Capital in the Theory of Economic Growth

The author presents the evolution of the theory of economic growth and concludes that fundamental questions about the theory of growth should be addressed by applying a general concept of human capital based on knowledge and qualifications. Human capital is the most comprehensive indicator to describe economic growth and differences in affluence among nations. The analysis is divided into two parts. The first part of the study describes the historical evolution of “economic thought”-from a stage where technological progress was treated as an “exogenous phenomenon” and a veritable “manna from the sky,” as the author describes it, to a situation in which technological progress became an “endogenous variable” resulting from the accumulated know-how. The subsequent evolution of the term involved a reevaluation of the role of the human factor in production. With time, economists discovered that, alongside physical capital, human capital was a prime factor that contributed to growth as a driving force behind technological progress. The second part of the work describes the complex role of human capital in the production process. The author notes that, in a modern economy, the human factor determines the development and implementation of new technologies, in addition to the production process itself. Human capital determines the technology gap, the diffusion of know-how and the efficiency of its adaptation. As a result, investment in human capital is a fundamental factor behind development, the author concludes

The Role of Human Capital in Technological Knowledge Transfer Through Foreign Investment

Access to global knowledge resources is indispensable for improvement of competitiveness of the economy. Foreign direct investment (FDI) is one of the channels through which international diffusion of technological knowledge takes place. Nevertheless, FDI do not always involve transfer of technological knowledge. There is a feedback effect between absorption capacity between the FDI level and saturation with knowledge. Human capital is a key factor here. On the one hand, FDI inflow depends on access to strategic assets in the host country, especially to human capital. On the other hand, the activities of transnational corporations, being the main carrier of FDI, may contribute to increased formation of strategic resources. The scale of advantages from knowledge transfer a FDI hosting economy can obtain grows with the level of its advancement. They depend mostly on an appropriate level of endowment with human capital and on involvement of enterprises and the economy in research and scientific activities