Summary

Knowledge (innovative) economics represents final stage of world economics transformation. Traditional economy or pre-industrial era preceded industrial production, which on the other hand was replaced by post-industrial period and today resource-technologies are replaced by scientific technologies at micro as well as macro levels.

Knowledge economics increasingly influences the state economic succession. It within the previous economic relationships, state prosperity was determined by extensive type of production, since late middle ages, the prerequisite for economic succession became the cheapening of labor production as a result of implementation of novel technologies. Therefore, human being, as a knowledge factory became a generator of novel technologies, innovative ideas. With the help of neoclassical theory, it can be said that economic growth represents the outcome of increasing labor workforce along with technological processes reducing the expenses. Taking into consideration knowledge economics, economic growth depends on human factors, which participates in production process in the form of constantly renewing knowledge capital. Conceptual basis of knowledge economics in post-industrial society represents knowledge and human capital, functional characteristics of which are based on two fundamental grounds: 1. Knowledge represents one of the major factor for production and possesses value; 2. Knowledge and human capital is a production capital. The more and novel knowledge is accumulated and the more it complies with the requirements existed on the market, the highe is the indicator of evaluated in capital human knowledge [Julakidze, 2016:1].

The relation between economic growth and education has already been investigated among scientific circles abroad. Artur Madison (the author of ~Dynamic Forces in Capitalist Development) found out that the increasing investments in education for 1% increases gross domestic product by 0.35%, and the organization of economic cooperation, on the basis of the facts analyzed by him, shows that increasing the statistical duration of teaching for one-year results in the increase of GDP by 3-6%.

On the basis of the information provided by the same organization, 32% of the population possess higher education. However, major part of this data is taken by the developed countries. Developed countries are leaders in terms of education percentage share in Gross Domestic Product (average 5.75%) and in terms of expenses directed to higher education (average 10 655 Dollars per student a year).

Given facts prove the opinion that the more educated people exist in a country, the higher is level of economic condition in these countries. The number of the examples, that prove direct relation between technological innovations, developed through scientific researches, and the efficiency of economic decisions, taken on the basis of given researches, strongly proves the provision that the science integrates with the economics and scientific knowledge generates additional value to the bigger extent compared to other production factors.  Scientific knowledge, which is acquired through researches and analysis, is applied with the creation of material as well as non-material productions. Thus, education and scientific knowledge creates additional value and increases productive assets. Specific advantage of any economica entity exists in its innovative activity, opportunity to generate novel knowledge and employ it through novel methods.

Physical and spiritual firmness depends on various social factors – health, culture and rest, feeding levels. Therefore, the scientists of various countries reached the conclusion that except the investments in education, it is important to draw adequate attention to funding human capital, which will definitely reflect on the productivity and the increased efficiency of production. A wide range of approaches for study of human capital is given. All these approaches can be attributed to two directions: first – these are the works related to the increase of human conditions, the second – the works, which focus on human perfection, his/her intellectual and physical characteristics. A group of theories, which covers the analysis of improving human conditions, can be attributed to the coefficient of life quality (A. Campbell, S. Coul, I. Milze and others) and population quality (I. Pubin, A. Pechei and others).

And the groups of theories, which aim human characteristics perfection can be attributed to „Human Potential” and „Human Capital” concepts. All the theories, which exists in scientific literature and is based on „Human Capital” concept may be divided into two groups: 1) Economic Approach – which depends on human capital index and human development research concepts; and 2) sociological approach – which describes human capital as a characteristic of separate individual group, which characterizes the level of social development and the ones who support methodological individualism, which considers human capital in close relation to the individual.  

World human capital is a part of national wealth and represents its 2/3. Development paradigm of human capital of USA and leading European countries has been developed on the basis theory and practice which is currently being refined. In 2012, the value of USA human capital equaled to 97 Trillion USD, which is 78% of national wealth of the country. 26% of human capital of the world is attributed to USA (its share in world economics is 21%), Russia – 8%, China 7%, Brazil and India 2-2%, Europe 67%. This indicator for Georgia represents 30%, Russia – 50%. For most of the countries, human capital is above half of the country’s wealth (except OPEC ones).

Major basis of human capital development is education. Major criteria of human capital development are the expenses in education. In overall, investments in human capital affects on the prospects of country’s development.

The share of the expenses on education is determined as the overall amount spent on education by state and private sector.