Human capital and international competitiveness in Europe, with special reference to transition economies

This paper assesses the impact of human capital endowments on international competitiveness in Europe, with special reference to transition economies in Central and Eastern Europe (CEE). The analysis uses longitudinal data for 27 European economies over the period 1995-2010. In line with the orthodox theory, a positive relationship is found between the labor force’s level of educational attainment and competitiveness. While in the European Economic Area (EEA17) tertiary education is the only significant education-based determinant of the export market share, in CEECs both the shares of the workforce with secondary and tertiary education are significant with the former having a greater impact. Some evidence is found for the hypothesized impact of the quality of education.