INVESTMENTS IN HUMAN CAPITAL AS A CONTRIBUTING FACTOR TO RUSSIA'S BETTER COMPETITIVENESS

The globalization processes, that are taking place worldwide, blur the competition boundaries between nations and affect Russia's competitiveness. In recent years, the competitiveness of the Russian Federation has been limited. For instance, the Global Competitiveness Index, calculated by experts at the World Economic Forum, shows slightly better competitiveness of the Russian economy. In 2013-2014, its 64th place is not very prestigious, although compared with the last year, Russia has climbed from the 67th position to the 64th one among 148 countries in the international ranking. Obviously, today our country is pursuing a path of unbalanced development, with its oil and gas industries still being key manufacturing areas. It is necessary to diversify production, create technology intensive products with high added value. This will not only improve the standard of living, but also ensure national security, and independence from world market conditions. However, accelerated productivity growth may lead to labor shortage. Therefore, there is a need for investments in human capital. It is the condition of human capital that shapes competitive strengths of nations in the globalizing world. According to the UN 2012-2013 report, Russia is listed in the group of countries with a high Human Development Index (HDI = 0.816 before calculation methods have been reviewed) and ranks 55th among 186 states. The position occupied by Russia among other countries such as Bahrain (48th), Belarus (50th), and the Republic of Palau (an island nation) (54th) and others, is not the most appealing in this ranking. The index value, that reflects the quality of life, has dropped to 0.788 after new indicators were introduced in the calculation methodology, which is associated not only with the worse education levels but shorter life expectancy as well. Thus, for the normal reproduction of workers, the state should assume part of investments in human capital. One of the target areas should become better public spending on housing and government support for development of this industry. To improve Russia's competitiveness and enter a new trajectory of sustainable growth, it is necessary to remember that increasing productivity and developing innovative economy require the primary focus on social and economic policies.