Proceedings of the 3rd European Conference on Intellectual Capital

Maria Simonova
“Concept <strong>of</strong> human capital” studies <strong>the</strong> relationship between <strong>the</strong> investment in people, human capital
accrual and <strong>the</strong> benefits gained by <strong>the</strong> society from this investment. There are very different attitudes
among today’s economists towards <strong>the</strong> notion “human capital”, but all <strong>of</strong> <strong>the</strong>m agree that <strong>the</strong> human
capital is <strong>the</strong> principal driving force in <strong>the</strong> society and that also <strong>the</strong> state, not only <strong>the</strong> individual, must
pay special attention to <strong>the</strong> formation <strong>of</strong> human capital (Dobrinin 1999).
Human capital is such a totality <strong>of</strong> human capabilities and skills on which <strong>the</strong> potential <strong>of</strong> his/her
economic and social activity is dependent. The notion <strong>of</strong> human capital is mainly related to <strong>the</strong>
economic behaviour <strong>of</strong> individuals, especially to <strong>the</strong> manner how <strong>the</strong> knowledge and skills
accumulated by <strong>the</strong>m increase <strong>the</strong>ir productivity and income, thus increasing also <strong>the</strong> productivity and
income <strong>of</strong> <strong>the</strong> entire society. By a purposeful investment <strong>of</strong> efforts and finances in education and
skills, <strong>the</strong> society can obtain <strong>the</strong> desirable economic return – both on <strong>the</strong> level <strong>of</strong> individuals, and
community (Коrchagin 2004).
Gary Becker, one <strong>of</strong> <strong>the</strong> founders <strong>of</strong> <strong>the</strong> concept <strong>of</strong> human capital, characterises it in such a
way:”New technological discoveries cannot give benefit to <strong>the</strong> countries if in <strong>the</strong>se countries <strong>the</strong>re are
few qualified employees who would know how to use <strong>the</strong>m. The economic growth is very dependent
on <strong>the</strong> synergy between new knowledge and human capital. Therefore <strong>the</strong> increase in education and
training has followed after <strong>the</strong> progress <strong>of</strong> technological knowledge in all countries that have achieved
a significant economic growth” (Becker 1983).
Investment in human capital is any action that increases qualification level and skills, thus raising <strong>the</strong>
work productivity. Investment in human capital comprises <strong>the</strong> costs for healthcare, acquisition <strong>of</strong>
special and general education, expenses related to search <strong>of</strong> work, acquisition <strong>of</strong> pr<strong>of</strong>essional skills in
production, migration, upbringing <strong>of</strong> children etc. (Schultz 1971).
One can separate <strong>the</strong> following sources <strong>of</strong> human resources investment: <strong>the</strong> state, non-governmental
organisations, enterprises, international foundations and organisations. Each <strong>of</strong> <strong>the</strong> above-said
sources can be a subject <strong>of</strong> human capital investment. Nowadays <strong>the</strong> state’s role in this domain is
quite large (Dobrinin 1999).
Investment in education is very important, because <strong>the</strong> human capital determines both <strong>the</strong> work
productivity and capacity <strong>of</strong> <strong>the</strong> state to produce new technologies and to use <strong>the</strong> existent ones. In
contemporary conditions <strong>the</strong> competitive ability <strong>of</strong> an economy and its modernisation is determined
within <strong>the</strong> state and is implemented by <strong>the</strong> human resources. They are persons with education and
high level <strong>of</strong> qualification, whose pr<strong>of</strong>essional experience is determined by <strong>the</strong> possibilities and limits
<strong>of</strong> necessary changes. Thus, one <strong>of</strong> <strong>the</strong> basic tasks for creation <strong>of</strong> efficient and competitive structure
<strong>of</strong> industries in <strong>the</strong> long-term economic strategy <strong>of</strong> Latvia is <strong>the</strong> human capital development (Latvia.
Report on Nation’s Development 2007).
One <strong>of</strong> <strong>the</strong> priorities in Latvia’s development is <strong>the</strong> use <strong>of</strong> human resources in our state and
evaluation <strong>of</strong> <strong>the</strong>ir development prospects. According to I. Macconnell and S. Brue, “Expenses can be
regarded as investment because <strong>the</strong>y are realised upon reckoning that <strong>the</strong>se expenses will be
compensated several times by <strong>the</strong> increase <strong>of</strong> pr<strong>of</strong>it in future” (Мacconnell 1992).
Russian scientist Y. Korchagin divided <strong>the</strong> human capital in two groups: negative and positive human
capital.
Positive human capital is <strong>the</strong> human capital, which ensures a positive return on <strong>the</strong> investment during
<strong>the</strong> development process: rise in living standards <strong>of</strong> <strong>the</strong> society, growth <strong>of</strong> innovation and institutional
potential, development <strong>of</strong> education system, augment <strong>of</strong> knowledge, growth <strong>of</strong> science, improvement
<strong>of</strong> human health, rise in quality and accessibility <strong>of</strong> information. Negative human capital is <strong>the</strong> human
capital, which does not provide any positive return on investment during <strong>the</strong> development process and
improvement in life quality (Коrchagin 2004). Which trends will increase in <strong>the</strong> human capital
development – positive or negative ones? It depends on <strong>the</strong> attitude <strong>of</strong> all involved parties – <strong>the</strong> state,
institutions and population. If <strong>the</strong>ir behaviour is economically and socially active, <strong>the</strong>n <strong>the</strong> negative
trends will diminish. Nowadays <strong>the</strong> state’s role in this aspect is ra<strong>the</strong>r great. The principal objectives <strong>of</strong>
state investment in human capital are: raising <strong>of</strong> <strong>the</strong> education level and increase <strong>of</strong> intellectual capital
<strong>of</strong> <strong>the</strong> nation. Today <strong>the</strong> problem <strong>of</strong> sustainable development is very topical, also by including it into
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