A continuation of the economic growth in central and eastern Europe is “not to be taken for granted”, argue the authors of this paper from the think tank ‘Lisbon Council for Economic Competitiveness and Social Renewal’.
The study, focusing on long-term economic and social trends in central and eastern European countries, is part of a project launched in 2006 – the Human Capital Index – that aims to define and measure EU member states’ human capital – that is, knowledge and education figures as a decisive economic resource.
The study takes into account the following factors:
- Human capital endowment: the cost of all types of education and training per person active in the labour force;
- Human capital utilisation: how much a country’s human capital is deployed;
- Human capital productivity: a country’s overall consumption divided by all the human capital employed in that country;
- Human capital demography and employment: an estimation of the number of people who will be employed in 2035, considering the current economic, demographic and migratory trends.
According to the authors, despite their observation that “nowhere in Europe has economic growth been as impressive and durable as in the countries of central and eastern Europe”, a major challenge remains overcoming the gap in human capital investment and utilisation in these countries.
While central and eastern European countries have been “the engine of dynamism, mobility and flexibility” that was lacking the EU-15, the human capital issue in these new member states could have a negative effect on the EU economy as a whole if nothing is done to bridge the gap, warns the authors.
The paper outlines a number of factors that threaten the economic performance of new member states, including adverse demographic developments, under-utilisation of human capital, the brain-drain and inadequate investment in education and skills.
In order to secure future growth in central and eastern European countries and across Europe in general, the paper finally makes a number of recommendations targeting eastern and central European countries’ political orientation:
- Improve public investment in education and skills;
- Leave no socio-demographic group behind. The low birth rate and the brain drain make it compulsory to make every possible effort to integrate everybody into modern labour market, argue the authors;
- Link the economy to the knowledge networks of the world by supporting the participation of universities, research institutions in technology and research networks in Europe;
- Prepare for the ageing society to limit the impact of this demographic shift.