Human Capital, Research and Development and Productivity Growth: Empirical Analysis for Slovenia

The aim of this article is to present empirical estimates about the impact of human capital on labor productivity growth in the case of Slovenia. Instead the conventional methodology the methodology principally aimed at estimating the real convergence of labor productivity was used. The basic difference between both methodological frameworks is in the bias of the result. The conventional methodology estimates the growth impact of human capital directly and for this purpose empirical data on the amount of human capital are needed. However, human capital is in itself an imaginary category and there is no exact methodology for measuring its value. The results about the impact of human capital on labor productivity are therefore questionable and potentially biased. In such cases the use of methodological frameworks which estimate the growth impact of human capital indirectly is more appropriate. This was also the main reason why the methodology principally used for convergence analysis was employed in the research. In this way the obtained empirical estimates at sectoral level indicated that the basic pillars of economic growth in the case of Slovenia are in line with theoretical expectations. The results are at the same time also an argument in favor of the proposed empirical method.