Effective realization of human capital as an important factor of economic growth

The major socio-economic changes that place in the world greatly expand the study subject of economic theory. The world has entered a new innovative way of development, which makes it necessary to reconsider the basic economic categories and laws. This is reflected in the evolution of capital theory, the theory of cycles, development theory and the theory of economic growth. These theories attempt to adequately reflect changes in the world both in terms of identifying new patterns and factors of development and in terms of their qualitative measurement. In recent decades economists have become more interested in the theory of economic growth with regard to human capital. Technical and economic changes, occurring in the world, force researchers to more closely consider the causes of economic growth and to search for new interpretations of the rate differences in economic growth of countries. From this perspective, a comparative analysis of these theories is of great interest. In this paper basic endogenous models of economic growth based on human capital are studied. Almost all economic growth models with regard to human capital are based on the assumption that the fact of accumulation of human capital is a necessary and sufficient condition for effective growth. But the accumulation of human capital is not sufficient to ensure the "qualitative" economic growth. It is necessary to take into account the level of realization of human capital. Only the high-level of realization of human capital can ensure a steady and "qualitative" growth. Strengths and weaknesses of these models are identified and a new approach to assessing the role of human capital in the economic growth of countries is proposed. New theories of growth more realistically reflect the role of human capital in countries' economic growth. Moreover, empirical studies suggest that the human capital explain the differences in countries' economic development. But these theories have a number of shortcomings. In particular, they are all based on the principle of the diminishing marginal productivity of human capital. The results of numerous empirical studies contradict the principle of diminishing returns, and constant returns to scale. These empirical data often show increasing returns to scale due to positive externalities. Analysis of the above research enables us to assume that increasing returns to scale are not due to increasing returns on physical capital, as stated in these theories, but rather on human capital. However, increasing returns of human capital is possible only on the level of the whole economy but not on the level on individuals, and only in the long term. With this in mind, a precondition for the increasing returns of human capital and the rate of effectiveness of human capital realization are proposed.

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