The assessment of relationship between human capital and economic performance in Slovakia, Poland and Sweden

The role of human capital as an important driver of economic and social development is well-established. Economic theory, and even more so economic practice, seeks to assess its impact on labor productivity and economic growth. The goal of this paper is to design and construct a human capital index comprising pertinent indicators, use it to evaluate human capital in selected European Union countries (Slovakia, Poland and Sweden), and then to identify the relationship between human capital and economic growth in the three countries. Unlike the HCI compiled by the World Bank, which focuses primarily on outcome indicators and evaluates more than 170 different countries, our proposed index also includes cost indicators. This index is designed for developed countries, where indicators such as the under-five mortality rate or expected length of schooling up to a certain age are less meaningful. The analysis was conducted for the period spanning 2014 to 2023 using statistical country data from Eurostat. Descriptive statistics, one-factor analysis of variance, Tukey HSD test, base index, geometric mean, correlation, regression, and comparative analysis were employed to fulfill the objectives of the paper. The Human Capital Index (HCI) showed the lowest value at the beginning of the observed period in Poland. However, in the subsequent years, Poland exhibited a more pronounced trajectory of human capital, as evidenced by its surpassing Slovakia in terms of HCI growth. In Sweden, the human capital index in 2014-2023 was significantly higher than in Slovakia and Poland. The GDP growth rate exceeded the average growth rate of the human capital index in all three countries, i.e. in all countries economic growth outpaced human capital growth, but the differences in favor of economic growth were modest. Nevertheless, it can be reasonably assumed that the differences in favor of economic growth would have been more pronounced if economic development had not been slowed down by the Covid-19 outbreak.