How Have Changes in Human Capital Investment Impacted the Development of the National Economy of Finland?

Abstract

This paper studies the link between human capital investments in Finland and economic growth. More specifically it will establish the link between education and national prosperity. Initially many of the cornerstones of investment theory and the production function have to be taken into consideration. These provide the idea behind the link. Throughout this paper that link is further developed through the use of varying streams of literature, including country-specific studies, theoretical points of view, econometrical calculations, as well as a number of governmental organisations providing first hand data.

Through these sources this paper is able to identify many of the limitations, challenges, and most importantly benefits of the investments. Some of the main challenges faced in Finland at the moment are regional gaps in wealth distribution, the drain of human capital out of the country and an aging population.

These challenges are being addressed by the Finnish policy makers when developing budgets, however this paper concludes that although investments into education certainly add value on a micro level in Finland, it can not be conclusively said that it directly impacts economic growth in the ways it is currently being measured.