Organizational and Economic Mechanism of Human Capital

Formation

Shomiev Golib Uktamovich

Navoi Innovations University, Navoi, Uzbekistan

Keywords: Human, Capital, Expenses, Formation, International Experience.

Abstract: This article explores how various organisational and economic factors impact the advancement of human

capital. It examines international experiences in human capital development, with a particular focus on both

developed and developing nations. Additionally, it analyses the economic influences on the development of

healthcare systems. By bringing together insights from different contexts, this study provides a thorough

overview of the challenges and opportunities involved in enhancing global human capital.

1 INTRODUCTION

The practical application of human capital theory

marks a pivotal moment for many nations, shaping

their approach to fostering human development

across health, education, culture, and living

standards. Economic evidence underscores the

significance of investing in human capital formation,

particularly in countries lacking abundant natural

resources. These nations have relied heavily on

human capabilities, recognising them as paramount

for both production and scientific progress. This

strategic focus has yielded remarkable economic

growth and tangible outcomes. Similarly, developed

countries have prioritised investments in people since

the mid-20th century, surpassing material

investments. The global community categorises

nations based on their overall development, with each

group characterised by a distinct formation of human

capital. This delineation highlights the diverse

strategies employed worldwide to nurture and

leverage human potential for sustainable progress.

2 LITERATURE REVIEW

The foundation of human capital theory owes much

to the seminal works of scholars from the Chicago

School, including T. Schultz, G. Becker, H. Bowen,

M. Blaug, J. Mincer, and S. Polachek. Notably, within

the CIS region, significant contributions to this theory

have been made by esteemed academics such as S.G.

Strumilin, A.I. Dobrynin, S.A. Dyatlov, R.I.

Kapelyushnikov, L.G. Simkina, A.V. Koritsky,

Yu.A. Korchagin, I.V. Skoblyakova, among others.

In Uzbekistan, pivotal research on these matters has

been undertaken by luminaries such as academician

R. A. Ubaydullaeva, S. S. Gulyamov, K.H.

Abdurakhmanov, A. A. Artikov, N. K. Zokirova, O.

K. Abdurakhmanov, B. Kh. Umurzakov, Kh.P.

Abulkosimov, A. V. Vakhabov, L.P. Maksakova, N.

H. Rakhimova, D.M. Karimova, alongside Z.Ya.

Khudoiberdiev, D. N. Rakhimova, and M. Kh.

Saidov.

These scholarly endeavours have significantly

advanced the understanding of human capital

development levels in Uzbekistan. However, the

cultivation of human capital within the healthcare

sector remains inadequately explored.

3 ANALYSIS & RESULTS

Developed countries, exemplified by the USA,

Canada, European nations, Japan, New Zealand,

Australia, Israel, Singapore, and Hong Kong, boast

highly efficient economies and cutting-edge

technologies. Their prowess spans various sectors

such as biotechnology, environmental technology,

software, communication systems, and more. In

nations like the USA, Finland, Germany, and

Switzerland, human capital accounts for up to 80% of

national wealth, propelling them to the forefront of

the global human capital index. These nations heavily

Uktamovich, S.

Organizational and Economic Mechanism of Human Capital Formation.

DOI: 10.5220/0012840100003882

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd Pamir Transboundary Conference for Sustainable Societies (PAMIR-2 2023), pages 293-295

ISBN: 978-989-758-723-8

293

invest in human capital, prioritising basic research

and the creation of breakthrough technologies, which

in turn fuels economic growth and elevates living

standards.

Contrastingly, developing countries like Taiwan,

Thailand, Malaysia, Brazil, Chile, Mexico, and

transition economies like Slovenia, Czech Republic,

Hungary, and Russia focus on bridging the economic

gap with developed nations. Despite their

industrialised economies, they strive to enhance their

workforce's quality through education and skill

development, positioning themselves competitively

in the global market.

Human capital emerges as a linchpin for

economic growth and technological advancement

worldwide. In a free market, human capital gravitates

towards environments offering better compensation

and living conditions, illustrating its inherent value.

Investments in human capital yield substantial long-

term economic benefits, surpassing returns on fixed

capital investments. This shift is evidenced by the

increasing share of human resources in national

wealth, particularly in developed countries where

human capital has become the cornerstone of

production efficiency and societal progress.

Countries like the United States and Japan

exemplify distinct approaches to nurturing human

capital. In the US, legal and financial frameworks

incentivise private investments in education and

healthcare, while Japan prioritises lifelong

employment and comprehensive support systems for

workers. Germany, devoid of abundant natural

resources, thrives on its robust human capital,

scientific innovation, and active participation in

global trade.

China, with its vast human capital potential,

acknowledges the imperative of investing in

education and healthcare to sustain economic growth.

South Korea, having transitioned from innovation-

driven development to a knowledge economy,

underscores the pivotal role of human capital in

sustaining economic prosperity. Notably, South

Korea's emphasis on education and innovation sets a

precedent for other nations aspiring to achieve similar

economic trajectories.

In healthcare, countries like Switzerland,

Germany, and Sweden demonstrate varying models

of provision and financing. Switzerland's compulsory

health insurance system ensures comprehensive

coverage for all citizens, while Germany offers a mix

of public and private insurance options. Sweden's

taxpayer-funded healthcare system delivers high-

quality services with minimal out-of-pocket

expenses. These nations' healthcare systems reflect

their commitment to ensuring universal access to

quality healthcare, contributing to their citizens'

overall well-being.

Despite regional variations, investments in

primary healthcare remain a priority for middle-

income countries, underscoring the importance of

accessible and affordable healthcare services. Spain

stands out for its exceptional healthcare system,

characterised by state-of-the-art facilities and skilled

professionals, offering free medical care to all

citizens.

In Russia, compulsory health insurance drives

healthcare financing and is projected to witness

substantial growth in expenditures over the coming

years. These investments reflect a broader global

trend towards prioritising healthcare as a crucial

component of human capital development and

societal progress.

4 CONCLUSION

In conclusion, the challenge of achieving cost

optimization while ensuring universal access to

quality healthcare remains paramount. Simply

increasing the share of paid medical services doesn't

guarantee equitable access. Therefore, exploring

more rational funding mechanisms becomes

imperative.

Transitioning to a health insurance model offers a

promising solution, fostering joint responsibility for

healthcare provision. By financing healthcare through

insurance premiums, collected in a central fund, this

model ensures broad coverage. Contributions from

employers and employees, along with budget

allocations for the non-working population, sustain

the fund. This approach not only reduces state and

individual expenditures but also engages businesses

in healthcare financing.

Drawing from international experiences in human

capital management reveals key strategies:

collaboration between universities and organizations

for specialist training, practice-oriented education,

continuous retraining, and robust financing of

education, healthcare, and social services.

Implementing these strategies in Uzbekistan, both

nationally and regionally, can enhance human capital

development. However, it's imperative to address

domestic organizational weaknesses, embrace

modern management practices, and align strategies

with global trends for accelerated human capital

growth, particularly in healthcare provision.

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