ANALYZING THE IMPACT OF HUMAN CAPITAL FACTORS ON COMPETITIVENES

There are a number of approaches to measure national competitiveness. However, in these reports human capital typically appears indirectly. The author’s purpose is to uncover how human capital contributes to competitiveness of economies and to propose an approach to identify the most effective improvement opportunities for countries, illustrated on the example of Hungary. The analysis is based on the data of the Global Talent Index Report (2011) and the Global Competitiveness Report 2012-2013. The components of the Global Talent Index (GTI) and their relation to the Global Competitiveness Index (GCI) were analyzed with a linear programming based similarity analysis method, component-based object comparison for objectivity (COCO). Based on the output of the analysis it was identified how sensitive the Global Competitiveness Index is to the components of the GTI. Hungary’s position was analyzed further to quantify improvement opportunities and threats based on the step function resulted by the COCO analysis. The author concludes that the human resource of a country is a pivotal element of national competitiveness. By developing human capital of the country the overall competitive position may be improved. Areas of priorities may be identified and the level of intervention may be quantified specific to a country. This could help policy makers to decide in the allocation of resource to maximize effectiveness, leading to improve (or protect) a country’s overall competitive position in the global arena.