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Liburkina L. M.

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The Impact of Human Capital Investment on Economic Growth: Evidence and Policy Implications
Lazko K. V.

Lazko, Kyrylo V. (2025) “The Impact of Human Capital Investment on Economic Growth: Evidence and Policy Implications.” Business Inform 5:191–196.
https://doi.org/10.32983/2222-4459-2025-5-191-196

Section: Investment Processes

Article is written in English
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UDC 331.101:338.24

Abstract:
This article addresses the increasingly critical role of human capital investment in shaping economic growth in both developed and developing countries. The relevance of the topic is underscored by the global transition towards knowledge-based and digital economies, where the accumulation of knowledge, skills, and health-collectively termed human capital has become a decisive factor for enhancing labor productivity, fostering innovation, and ensuring long-term competitiveness. Recent economic disruptions, demographic shifts, and rapid technological change have further highlighted the importance of strategic investments in education, vocational training, and healthcare. Despite notable progress in many countries, persistent challenges such as brain drain, skill mismatches, and unequal access to quality education and health services continue to undermine the full realization of human capital’s potential. These issues are particularly acute in developing and transition economies, including Ukraine, where structural transformation and sustainable development depend heavily on the effective mobilization of human capital resources. The primary aim of this article is to synthesize contemporary empirical and theoretical research on the impact of human capital investment on economic growth, while also exploring the policy implications necessary for maximizing its benefits. The study adopts a systematic literature review methodology, analyzing recent English-language articles from leading international journals indexed in scientometric databases such as Scopus and Web of Science. This approach ensures a comprehensive and comparative perspective, drawing on evidence from diverse regions including Europa, Africa, Asia and post-Soviet states. The study identifies key trends, such as the positive and statistically significant relationship between investment in education, skills development, and health, and long-term economic performance. It also highlights the importance of the timing, quality, and alignment of human capital investments with labor market needs, as well as the necessity for inclusive and lifelong learning strategies. It is emphasized that the benefits of human capital investment are cumulative and often realized over an extended period, requiring patient and sustained policy interventions. Empirical studies reviewed show that countries with higher levels of human capital tend to experience faster, more resilient, and inclusive economic growth. The study also reveals that financial development alone is insufficient to drive growth without a complementary foundation of skilled human capital, as innovation and entrepreneurship depend on the effective utilization of financial resources. Furthermore, the article discusses the specific challenges faced by Ukraine, such as demographic decline, labor migration, and underinvestment in research and development, which hinder the country’s ability to fully leverage its human capital for economic recovery and EU integration. This study emphases the need for integrated policy approaches that simultaneously promote human capital development and financial sector growth. It advocates for comprehensive reforms encompassing education, healthcare, continuous upskilling, and supportive work environments to enhance innovation, productivity, and inclusive economic development. Ultimately, the synthesis of international experience and policy recommendations presented in this study provides valuable guidance for governments seeking to design effective strategies for human capital investment as a foundation for sustainable and resilient economic growth.

Keywords: human capital, economic growth, education investment.

Bibl.: 14.

Lazko Kyrylo V. – Postgraduate Student, Department of Economics and Management, V. N. Karazin Kharkiv National University (4 Svobody Square, Kharkіv, 61022, Ukraine)

List of references in article

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Wilson, R. A., and Briscoe, G. “The impact of human capital on economic growth: A review“. European Commission. Report to DG Employment and Social Affairs. 2004. https://www.cedefop.europa.eu/files/BgR3_Wilson.pdf
Rangongo, M. F., and Ngwakwe, C. C. “Human Capital Investment and Economic Growth: A Test of Endogenous Growth Theory in Two Developing Countries“. Acta Universitatis Danubius. 2019. https://ideas.repec.org/a/dug/actaec/y2019i1p92-107.html
Debgupta, S., Divekar, R., and Kumar, P. “Empirical Analysis of the Effect of Human Capital Generation on Economic Growth“. Proceedings of the 9th Annual International Conference on 4C's-Communication, Commerce, Connectivity, Culture (SIMSARC 2018). India: European Alliance for Innovation, 2019. 1-7. DOI: http://dx.doi.org/10.4108/eai.18-12-2018.2286388
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Saroj, S. et al. “In what ways does human capital influence the relationship between financial development and economic growth?“ Benchmarking: An International Journal, vol. 30, no. 4 (2023): 1073-1091. DOI: https://doi.org/10.1108/bij-03-2023-0131
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“Ukraine Economic Update: Addressing Demographic Challenges“. World Bank Group. 2022. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099885005262211309/ukraine-economic-update-addressing-demographic-challenges
Bilorusets, L. et al. “The Development of Human Capital within the Framework of the Demographic Economy of Ukraine: Factors of Stability“. International Journal of Economics and Financial Issues, vol. 15, no. 4 (2025): 144-151. DOI: https://doi.org/10.32479/ijefi.19299
Gallardo-Gallardo, T., Tunnissen, P., and Skullion, T. “Talent management: context matters“. Journal of Human Resource Management, vol. 31 (2020): 457-473. DOI: 10.1080/09585192.2019.1642645
“Ukraine Plan: Human capital development and recovery“. European Commission. 2023. https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/ukraine-plan_en
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