The Role of Human Capital in the Economic Development and Social Welfare In Albania

Abstract

Continuously, the relation between education and economic development has been the focus of development researchers’ studies that study long-term growth. While theoretical models recognize education as the key to a country's economic growth (Bassanini and Scarpetta, 2001; Fuente and Ciccone, 2003; Jones, 2005 Bassanini, 2007), the importance of education is very low in empirical models.

The reason for this discrepancy is that for a long time education is measured by the years attended in school and not by the knowledge and skills gained, which according to an OSCE study, a student competences growth of 100 points (measuring unit) produces an increase of 2% of GDP per capita. Thanks to this identification, education is recognized as one of the main keys to development.

Various empirical studies show that productivity can be increased through training (Barrett and O'Connell, 2001; Scrutinio et al., 2006). In sum, these studies show that pre university, university education and training courses positively affect the increase of production, which in turn can positively affect the economic development of a country.

Thus, this article tends to evaluate the role of Albanian human capital in economic development of the country considering the relationship between education and productivity.