Human Capital Investment and Economic Competitiveness (Indonesian Competitiveness among ASEAN Countries)

Abstract

The objective of this paper is to investigate empirically the effects of investment in human capital on the competitiveness of the nation. Investment in human capital, particularly in terms of education, health, research and development, stimulates the economic growth and competitiveness of a country. The innovations developed through research and development (R and D) have been believed to cause the rapid economic growth. Education will also contribute to science and knowledge through R and D which is highly required for economic growth. Using descriptive cross-section data of investment in human capital combined with neoclassical economic thought, the paper investigates the transmission mechanisms of human capital investment to economic competitiveness of nations. The result of this research shows that the increasing growth of investment in human capital is positively correlated with the increase in the competitiveness of a country.