Imacs 2016 imecs 2016 Proceedings (Preliminary version) of the 4


ASSESSMENT OF INFLUENCE OF HUMAN CAPITAL QUALITY ON THE INNOVATIVE DEVELOPMENT OF THE TERRITORY



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ASSESSMENT OF INFLUENCE OF HUMAN CAPITAL QUALITY ON THE INNOVATIVE DEVELOPMENT OF THE TERRITORY

279.Ilya Panshin – Maria Tobien



Abstract

BACKGROUND: Nowadays the prospects for the socio-economic development of territories are largely determined by the level of innovation development, which is based on the use of high technology and information technology, intellectual resources, factors of production. Human capital is becoming one of the major resources required for the innovation development of economy, the foundation for economic growth.

METHODS: This paper observes and predicts the territory innovative development relying on the econometric modelling and on the correlation and regression analysis, depending on the parameters that determine the quality of human capital.

RESULTS: A new interpretation of "human capital" category was suggested and its structure, features and form factors were considered. There were singled out the unique properties of this category including such the characteristic of capacity with respect to the knowledge, intelligence, information, mobility, innovation, creativity, self-learning, etc., which determine the ability of a person to perceive and create innovations. There was developed the model of innovative advance of the territory on the basis of the indicators which characterize the ability of the region economy to reproduce innovation: the efficiency of the research and educational spheres, the population cultural and moral potential, the efficiency of the public health system. The indicators also take into account the size of the financing these spheres. The results obtained enable to define the degree of influence of the above parameters on the innovative development of the territory and also to determine the efficiency of investments in these areas.


Key words: innovative development, modelling, quality of human capital.
JEL Code: O15, E24, C15

280.Introduction


Among the main factors of economic modernization in the regions of the country and getting it on the innovative path of development, the most important thing is the human capital. Innovation activity, suggesting the creation of new or significantly improved products as well as the adoption of improved production processes, requires that employees should have new professional and social qualities, creativity and innovative thinking. In turn, in order to achieve human capital development and improve standards of the population life, it is necessary to actively use innovations, to introduce new technologies, to update the whole technological base of the economy. In other words, along with the advancement of innovative economy the person becomes a key resource for the development and the main value, which determines the development of the territory.

The original concept of human capital is associated with such american economists - Nobel Prize winners in economics – as T. Schults, G. Becker, S. Smith. A great contribution to the development of human capital theory were also made by such foreign scholars as J. Ben Poret, C. Bernard, M. Blaug, W. Bowen, J. Kendrick, K. Marx, A. Marshall, F. Machlup, S. Mill, B. Milner, J. Mincer, A. Osborne, W. Petty, D. Ricardo, A. Smith, R. Solow, L. Thurow, J. S. Fischer, M. Fridaman et al. Such Russian economists as A.N. Dobrynin, S.A. Woodpeckers, R.I. Kapelyushnikov, I.T. Korogodin, Y.A. Korchagin, M.M. Critskiy, I.V. Sobolev et al dedicated their works to the study of human capital [1-6,8,9].


281.1 New features of human capital


The analysis of the processes taking place in the modern economy revealed a number of regularities of its development and highlighted some new features of human capital.

With regard to the analysis of human capital, the main trends of modern society and the economy are:



      • the cognitive society formation - the system whose main purpose is to create conditions for self-improvement through the development of human capital;

      • the emergence of creatosphere or creative economy associated with the increasing role of creative activity and the perspective of its dominance;

      • innovativeness and high manufacturability of economics - economic activity is based on the flow of innovations, constant technological improvement, manufacturing and exporting high-tech products with a high added value and the technologies themselves, as well as the intensive exchange of "high-techs", all these acting as a catalyst for the economic development;

      • computerization of the economy, "digital revolution" and "Internetization" - high information density, transition to the digital media and the ability to quickly transfer data via the global Internet network, which contributes to the rapid development in all spheres of social life, the intellectualization of processes in management, industry and social sphere; distribution of "remote jobs" for intellectual spheres, contacts with the employer by means of telecommunication (Internet);

      • trend towards unification and standardization in all spheres of human life - ensuring uniformity of various objects that make up a single entity (product specifications, documentation and means of communication, religious dogmas and rituals, laws and regulations; structural elements; etiquette rules, etc...)

      • increasing civic, entrepreneurial and innovative activity in the society;

      • valorization (the increase of value) of knowledge in the economy in both developed and developing countries having an access to new scientific discoveries, trends, technologies, and the possibilities of their use;

      • need in qualified staff, basic and applied researches for high-tech industries;

      • diversification of education in the form of expanding the range of formats and technologies of education (external studies, remote, additional education, targeted training, corporate training, etc..), transition from the "compulsory education" to "proactive education" which is based on the educational activity of a student and self-education.

The above development trends characterize cognitive economy where knowledge plays a crucial role and the knowledge production is becoming a source of growth.

The economy development based on the knowledge is impossible without the improvement of human capital and the formation of its new features such as knowledge capacity, intelligence capacity, information capacity, exclusivity and mobility of human capital, as well as innovation, creativity, self-education and others.

Fig. 1 shows the human capital properties needed for its improvement under the conditions of the knowledge economy.
Fig. 1: Trends in the development of the economy and the cognitive properties of human capital


Cognitive Economy Development Trends




Priority of education and training


Valorization of knowledge


Creativity and science linkage of economy


Innovativity and manufacturability of economy


Unification of all areas of life


Informatization of the economy



Drive for the national identity




Self-learning


Information capacity


Mobility


Knowledge capacity


Innovation and creativity


Cognitive activity and intelligence capacity




Exclusivity and inventiveness


Properties of human capital



Source: compiled by the authors

The foregoing enables us to define the category of "human capital" which is actual for a cognitive society and economy: human capital is a system of knowledge, skills and abilities of a person, represented by a set of specific properties such as knowledge capacity, intelligence capacity, information capacity, exclusivity, mobility, innovation, creativity, self-learning, which are formed and developed through the investments in education, science, culture, health and which are the main factor of manufacturing and the source of growth in the knowledge economy.


282.2 Prediction of innovative development territory on the basis of indicators of human capital quality


In connection with the development of cognitive economy and the countries transition to the innovative development, special attention should be paid to predicting innovative development and studying the economy innovativeness and the indicators responsible for the quality of human capital. After all, a man with his individual abilities and a unique set of properties is becoming a key factor in the growth in the knowledge economy. The efficiency of the development and introduction of high-tech innovative technologies in a particular country or territory directly depends on the quality of the human capital.

It should be noted that the adequate reflection of processes taking place in the environment of innovation and their objective forecasting requires the selection of the most informative indicators that influence the innovative development of the territory.

To build a model of the territory innovative development we identified two classes of indicators:

- Indicators of "input" (factor indicators) characterize the quality of the human capital and its ability to reproduce and introduce innovations;

- The "exit" indicator (result indicator) reflects the effectiveness (recurrence) of the innovation segment of the area economy.

In this research we used the statistics over the regions of Russia for the last 13 years; the information being represented by the Federal Service of State Statistics of the Russian Federation [7, 10].

We have chosen the "volume of innovative products (works, services)" as the main indicator that determines the level of innovative development of the area.

* Innovative goods (works, services) are goods (works, services) which are brand new or have been subjected to some technological variations over the past three years.

Actually, a large number of different parameters influence on the effective indicator (volume of innovative goods, works, services). The analysis of works of home and foreign researchers on the subject being considered and the statistics being publicly available enabled us to calculate 21 indexes which are in charge of the human capital quality and can affect the innovative development of the territory in case they are changed (see Table. 1).

All indicators were grouped into five blocks:

Unit 1 - the level of public health development;

Unit 2 - the level of education development;

Unit 3 - the level of the research development;

Unit 4 - the level of culture development;

Unit 5 - the standards of living

It should be noted that it is not desirable to analyze the values of indexes in their absolute magnitudes. Therefore, the total value for each parameter is calculated according to the formula of linear scaling. Thus, we normalized all parameters to the range [0, 100].


Tab. 1: Quality indicators of human capital, affecting the innovative development of the territory

Unit

Indicator

The calculation formula / explanation

  1. the level of public health system development

x1 – providing the population with doctors



population per a doctor

x2 – providing with nursing staff

people per a nurse

х3 – providing with  hospital beds

the number of hospital beds per 10,000 people

х4 – sickness rate of population

the ratio of the number of illnesses with patients first-ever diagnosed to the average annual population

х5 – life expectance




  1. the level of the educational sphere development

х6 – providing the students of higher schools with teachers

the ratio of students to the number of teachers at higher schools

х7 – providing the students of secondary vocational schools with teachers

the ratio of students to the number of teachers at the secondary vocational schools

х8 – providing organizations with graduates

the ratio of the number of graduates of educational institutions to the required by the public employment services organizations needs in workers

х9 – completion of postgraduate and doctorate courses with the protected thesis per 10000 people




  1. the level the research sphere development

х10 – innovative activity of organizations

the ratio of the number of organizations implementing technological organizational or marketing innovations to the total number of surveyed over time period organizations in the country, industry, territory

х11 – inventive activities

the number of applications for patenting invention and utility model per 10,000 people

х12 – utilization of advanced technologies

the use of advanced manufacturing technologies per 1000 enterprises

х13 – Rate of innovation introduction


the ratio of the developed advanced manufacturing technologies to the number of advanced manufacturing technologies in use

х14 – the proportion of researchers with academic degrees in the total number of researchers




х15 – the efficiency of innovators work


ratio of the number of patents granted to the number of applications for patents and inventions

  1. the level of cultural sphere development

х16 – number of visits to the museums per 1000 people




х17 – the number of visits to the theaters per 1000 people




х18 – internetization of the population

weight proportion of households with the access to the Internet

х19 – crime ratel


the number of reported crimes per 100,000 people

х20 – readability factor

the proportion of the library visitors in the general population

  1. the standards of living

х21 – the proportion of people with the income above the subsistence level




Source: compiled by the authors

Then let's have a closer look at each of the five above-mentioned blocks.



  1. The level of public health system development. Physical strength, endurance, efficiency, immunity to disease which increase the period of active employment are necessary to every person, in every sphere of professional activity. The economic value and significance of health are unconditional for human capital accumulation. Health is one of the most important components of the human capital, and it is not only a value by itself, but it also affects the accumulation, quality and use of other components of the human capital. The health of the citizens and, consequently, the quality of the workforce, productivity and economic growth in general, depends on the level of the public health system (availability and quality of care).

  2. The level of the educational sphere development. The effectiveness of the educational system depends on the level of public education, readiness and ability to solve intellectual problems, to support scientific and technological progress. The quality of education, its practical orientation, correspondence of the university graduates qualification to the international and domestic businesses’ requirements are an important criterion in the development of innovative programs of the area.

  1. 3. The effectiveness of the research sphere. Research sphere provides a circulation in the economy of scientific knowledge, and is responsible for creating high-tech products and systems and for their distribution in mass production. The effectiveness of introducing innovative technologies in the country or territory directly depends on the success of this sector.

  1. The level of the cultural sphere development. The cultural sphere is responsible for the reproduction and preservation of spiritual and material values ​​and intellectual products of human activity. It is the cultural level of the population that provides the recognition of the society existing system of values​​, of culture, ethics and moral norms, which determine the human behavior in relation to work, things and other people.

  2. The standards of living of the population. Low income levels of the population restrains consumer demands, which in the chain of "buyer - producer" hinders the development of the market of technological innovations and socially-oriented innovations for households.

To determine the relations between the resultant index and the variable number of factors, and to identify one of those that have a significant effect on the dependent variables, it is proposed to use a correlation and regression analysis. The process of statistical research tends to confirm that any economic indicator is influenced by many factors, but only a small part of these significantly affects the resulting index and facilitates its change. At the same time the ignorance of factors having insignificant influence does not cause significant changes of the dependent variable. The analysis of the pair correlation coefficients between the factor and the resultant indexes allows us to identify the factors having a small effect on the final index. This implies the need to remove some of the factors from the model. Thus, analyzing the model of the territory innovative development we found the following factors insignificant: x1, x2, x3, x4, x6, x7, x8, x16, x17.

After the analysis of the results and the exclusion of a number of correlated indicators and consideration of all possible options of the model, the most significant multiple regression equation was drawn up by calculating the coefficients. It looks like that:

y = –568797 + 2422,57*х5 + 10,48*х9 + 1771,63*х10 + 23634,91*х11 – 62,18*х12 +

+ 7697,09*х13 + 6279,82*x14 + 263,38*х15 + 283,08*х18 – 717,37*х19 + (1)

+ 9638,31*х20 – 877,356*х21.

The economic interpretation of the linear regression equation allows to draw the following conclusions:



  • With an increase of life expectancy by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 2422.57 million rubles;

  • With the increase of the organizations provision with graduates by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 10.48 million rubles;

  • With the increase of the organizations innovation activity by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 1771.63 million rubles;

  • With the increase of the inventive activity by 1 unit (witht constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 23634.91 million rubles;

  • With the increase of the advanced technologies utilization by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will decrease by 62.18 million rubles;

  • With the increase of the innovation introduction by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 7697.09 million rubles;

  • With the increase of the proportion of researchers with academic degrees in the total number of researchers by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 6279.82 million rubles;

  • With the increase of the coefficient of innovators efficiency by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 263.38 million rubles;

  • With the increase of the population internetization by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 283.08 million rubles;

  • With the increase of the crime rate by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will decrease by 717.37 million rubles;

  • With the increase of the population readability coefficient by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will increase by 9638.31 million rubles;

  • With the increase of the proportion of people with incomes above the subsistence level by 1 unit (with constant values ​​of the other factors fixed at the average level), the volume of innovative products (works, services) will decrease by 877.356 million rubles.

It should be noted that the existence of the inverse relations between the rate of using advanced technologies and the capacity of innovative goods (works, services) can indicate the low efficiency of implementation and application of advanced production technologies in organizations, and it is a negative trend in the scientific field. In addition, the inverse relations between the proportion of people with incomes above the subsistence level and the volume of innovative products (works, services) may indicate that high standards of living decrease the innovative activity of citizens.

In addition, we developed the model which reflects the dependence of innovative goods (works, services) volume on the size of the investments in education, health, culture and science, because without financial investments the creation and production of a single product (especially innovative) is not possible.

y= –1108803214+ 0,61*х1+ 2,14*х2- 7,63*х3+ 1,71*х4, (2)

where x1 - investments in education, x2 - investments in health, x3 - investments in culture, x4 - investments in science (the cost of technological innovation).

Thus, we can conclude that when investing the education each ruble of investments gives the increase of the volume of innovative products by 0.6 rubles. When investing the public health sector each ruble of investments gives the increase of the volume of innovative products by 2.14 rubles. And when investing the science each ruble of investments gives the increase of the volume of innovative products by 1.71 rubles. The relations between the investments in culture and the capacity of innovative goods (works, services) show that this type of investment does not contribute to the innovative growth.

283.Conclusion


In conclusion, it should be noted that well-being of the people and the sustainable development of an area depends on the quality of the human capital. This idea has been proved in this research. Therefore, a well thought-out and consistent policy is needed in the field of human resources development and balanced investment in the human capital. This policy should be followed both at the level of individual firms, and at the level of the whole territory and state. And the application of mathematical and statistical tools enables to perform qualitative monitoring and to make rational timely adjustments in the course of various processes.

284.References


Becker G.S. (1993). Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education. Third Edition. Chicago and London. The University of Chicago Press

Bowen H. R. (1978) Investment in Learning. San Francisco

Kapelyushnikov R.I. (2012). How much does human capital Russia. Moscow. Higher School of Economics

Kendrick J. (1976). The Formation and Stocks of Total Capital. N.Y. Columbia University Press

Kuznets S. (1955). Toward a Theory of Economic Growth. In: R.Lekachman (ed.). National Policy for Economic Welfare at Home and Abroad. Garden City

Machlup F. (1984). The Economics of information and Human Capital. Princeton

Regions of Russia (2014). Socio-economic indicators. Stat. Sat. Rosstat

Schultz T. (1975). Human Capital: Policy Issues and Research Opportunities. Human Resources. New York

Schultz T. (1971). Investment in Human Capital: The role of Education and of Research. New York

Vladimir region in figures. (2015). Stat. Sat. Vladimirstat. from http://vladimirstat.gks.ru/wps/wcm/connect/rosstat_ts/vladimirstat/ru/publications/official_publications/electronic_versions/.


Contact

Ilya V. Panshin

Vladimir State University named after Alexander and Nikolay Stoletovs

Gorky Street, 87, Vladimir, Russian Federation

panshin@vlsu.ru
Maria A. Tobien

Vladimir State University named after Alexander and Nikolay Stoletovs

Gorky Street, 87, Vladimir, Russian Federation

kalinina_m5a@mail.ru





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