Volume 4, issue 6, 2025
271
FROM RAW MATERIALS TO KNOWLEDGE: THE ROLE OF HUMAN CAPITAL IN
DEVELOPING EXPORT COMPETITIVENESS
Kosimova Nafisa Fazliddinovna
Master's student at the University of World Economy and Diplomacy
Abstract:
This paper explores the significance of human capital in enhancing export
performance in emerging economies. It focuses on key challenges in the areas of education and
healthcare, as well as the effects of migration and social inequality on labor force development.
A comparative analysis, drawing on data from China, India, Russia, and Brazil, demonstrates
that investment in human capital is a critical factor in transitioning from a resource-based
economy to one centered on the export of highly processed goods and services. The paper
concludes by offering recommendations for developing a sustainable export strategy grounded in
human development.
Key words:
human capital, export, competitiveness, developing countries, global production
chains, education, sustainable development.
Human capital development is a long-term process aimed at expanding the number of competent
and promising citizens in the state. It involves acquiring and increasing the number of specialists
with the required knowledge, skills and professional experience. The creation and strengthening
of human capital involve investing in people and their development as effective and innovative
forces [1].
There are over 200 countries in the world with varying levels of wealth, necessitating their
classification for analytical purposes. This task is carried out by key international organizations
such as the United Nations (193 countries), the World Bank (189 countries), and the
International
Monetary
Fund
(190
countries).
According to the World Bank classification, countries can be broadly divided into three groups:
1.
Developed countries
– characterized by market-based economies and a high level of
social security.
2.
Countries with transition economies
– their GDP exceeds 50% of that of developed
countries.
3.
Developing countries
– their total GDP does not even reach 25% of the GDP of
developed countries.
One of the key characteristics of developing economies is the relatively low level of investment in
education, healthcare, and science compared to developed countries. This, in turn, results in limited
access to quality education, insufficient training of specialists, and a weakened capacity for
innovation.
However, in recent years, positive trends have emerged: countries in Asia, Latin America, and
Africa have intensified government efforts in education and workforce development, implementing
reforms aimed at modernizing curricula and improving the digital literacy of their populations. [2].
In developing economies, human capital has a number of specific features:
1.
Low level of investment in education and health care (less than 5% of GDP);
2.
Mismatch between the personnel training system and the demands of the labour market;
3.
High level of outflow of qualified specialists (brain drain);
4.
Uneven access to quality services between urban and rural areas.
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272
According to the World Bank and the United Nations Development Program, important
indicators of the state of human capital in developing countries are:
Average duration of education. The average duration of education in developing countries is
about 7.3 years, while in developed countries it is over 11 years. In Uzbekistan, the share of
higher education coverage increased from 9% in 2016 to 42% in 2023. However, problems with
the quality of education and its relevance to the labor market remain [3]. In a number of
countries, for example, in Mali, the literacy rate among women aged 25 to 64 does not exceed
17%, which emphasizes the importance of strengthening education programs for the adult
population.
Adult literacy rate. This rate in developing countries has increased from 81% in 2000 to 87% in
2020 (UNESCO). However, 763 million people are still illiterate, most of them women. In 2020,
one in seven people over the age of 15 lacked basic knowledge [4].
Child mortality rate and life expectancy. According to the World Health Organization (WHO), in
2022, the child mortality rate in developing countries was 37 per 1,000 live births, while in sub-
Saharan Africa it was 74 per 1,000 [5]. Life expectancy in the least developed countries
increased from 36.8 years in the mid-20th century to 65 years in 2019, but fell to 64.1 years in
2021 due to the COVID-19 pandemic [6]. Restoring and further increasing this indicator requires
a comprehensive approach, including investments in health, improving living conditions and
combating infectious diseases.
Export competitiveness involves more than just price advantage; it encompasses a range of
factors such as product quality, technological sophistication, compliance with international
market requirements, and the ability of the economy to ensure stable and predictable conditions
for foreign economic activity. In this context, it is essential to examine the set of factors shaping
export competitiveness in developing countries and to analyze the key trends that influence its
dynamics.
Figure 1 shows the factors influencing export competitiveness:
Fig. 1 K
ey factors affecting export competitiveness [7]
Below we can consider the main trends in the export of developing countries.
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273
1. Growth in the share of manufacturing industry.
Over the past decades, developing
countries' exports have shifted from raw materials to manufactured goods, driven by economic
benefits and strategic priorities. The production of high-value-added goods—electronics, textiles,
and machinery—provides greater profits, creates jobs, and requires skilled labor, stimulating the
development of education.
Industrial exports are more stable than raw materials exports. Industrialization is actively
advancing in China, Vietnam, Thailand, and Mexico. Even raw materials economies have begun
to develop pharmaceuticals and food industries. The share of developing countries in global
industrial exports has grown from 11% in 1980 to over 30% in the 2020s, reflecting a profound
structural transformation.
2. Participation in global production networks (GVC).
This is a model of dividing the
production of a product into stages in different countries. For developing economies, this is an
important growth factor, providing access to technology, management and production practices,
creating jobs and stimulating exports. Examples include the production of electronics, auto
components, textiles and agricultural raw materials in various countries in Asia and Latin
America. This attracts investment, provides employment and integration into the global economy.
However, countries at the lower stages of the chain receive a small share of the added value and
are dependent on the decisions of international corporations and external fluctuations. Developed
infrastructure (logistics, electricity supply, personnel) is necessary to participate in such projects.
3. Development of services exports.
Developing countries are expanding their activities,
including outsourcing, tourism and education. Services exports are based on human capital
development and are less dependent on transport restrictions, allowing such countries to
participate in the global economy.
The rejection of dependence on raw materials in favor of diversified, innovative and sustainable
exports allow developing countries not only to compete more confidently on the global stage, but
also to shape their own agenda in international economic relations. This requires systemic
support for human capital, stimulation of industrial and service modernization, as well as the
inclusion of sustainable development principles in national economic strategies. All this together
allows developing countries not only to “catch up” with developed economies, but also to create
their own growth models that meet the challenges of the 21st century.
Speaking about international experience, we can say that the examples of China, India, Russia
and Brazil show that the growth of educational indicators contributes to an increase in the share
of high-tech exports.
Human capital, including workers’ knowledge and health, influences economic potential.
Education increases productivity, improves the quality of goods and services, and enhances
exports and participation in global markets.
World Bank data confirm the strong relationship between investment in human capital and
export performance. For example, Table 1 shows the increase in average educational attainment
in four key emerging economies – China, Russia, India, and Brazil – over the past three decades.
Table 1
Year
China
Russia
India
Brazil
1990
7.2
10.8
5.6
6.8
2000
9.5
11.0
6.8
8.0
2010
11.0
11.2
7.5
9.0
2020
12.3
11.5
8.2
9.5
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274
(Source: compiled by the author based on analysis of data from World Development Indicators) [8]
The table shows that China and India demonstrate the most significant progress – up to 12.3 and
8.2 years respectively, compared to 7.2 and 5.6 years earlier. This indicates large-scale reforms
in the field of education and expansion of access to secondary and higher education, which
directly contributes to the improvement of the skills of the workforce and, as a result, to
strengthening the competitiveness of exports. Russia and Brazil, having an initially higher level,
show more moderate growth, which is due to the developed education system, but here an
emphasis is needed on updating knowledge and skills.
China: A Case Study in Systemic Development of Human Capital and Exports
China shows how human capital policies have changed its export model. In the 1980s, the
country exported low-cost raw materials, but investments in worker education and skills changed
the composition of exports. The average number of years of schooling for people aged 25–34
increased from about 7 years in 1990 to more than 12 years in 2020, allowing for the expansion
of electronics, machinery, and equipment manufacturing and enabling Chinese companies to
develop innovative products of their own. As a result, the share of high-tech products in exports
increased from less than 7% in 2000 to more than 30% in 2020 (see Table 2).
Table 2
Country
2000
2010
2020
China
6.5
18.7
32.4
Russia
4.2
6.5
9.8
India
10.3
22.1
35.5
Brazil
3.5
5.0
6.2
(Source: compiled by the author based on analysis of data from World Development Indicators
and China Statistical Yearbook)[8],[9]
These data illustrate how investment in human capital and education has enabled China to
become a leader in global high-tech exports, which is directly linked to improved skills and the
development of scientific and technological capabilities.
Russia: Challenges and Opportunities
Russia possesses substantial human capital potential, supported by a well-developed higher
education system and established scientific institutions. However, this potential remains
underutilized in the sphere of foreign economic activity, as the country continues to rely heavily
on raw material exports—an area where workforce qualifications have limited impact.
The manufacturing and high-tech sectors face both a shortage of skilled personnel and a weak
innovation infrastructure. Despite these challenges, the IT sector has demonstrated notable
growth: in 2022, exports of software and related services surpassed $12 billion. Enhancing
export competitiveness requires strengthening the connection between education and industry, as
well as creating favorable conditions for retaining qualified professionals.
India and Brazil: Diversity of Approaches
India and Brazil demonstrate different approaches to using human capital to develop exports.
India has focused on education and knowledge of English, which has allowed it to take a leading
position in the export of IT services and business processes - the share of services in exports
exceeds 40%, and the high-tech sector continues to grow. In Brazil, despite the improvement in
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the level of education, exports are still focused on raw materials. The development of high-tech
industries is constrained by weak innovation infrastructure and a shortage of skilled personnel.
Human capital plays a crucial role in ensuring export competitiveness and sustainable
development of developing countries. Investments in education and health care form the basis for
long-term economic growth, export diversification and access to higher technological levels. The
example of Uzbekistan shows that targeted reforms in the education sector can lead to significant
positive changes in a short period: the level of enrolment in higher education increased from 9%
in 2016 to 42% in 2023, and the number of higher education institutions increased from 77 to
213 over the same period [10].
Current global trends require a transition from a raw materials and labor-intensive model to a
more intellectually rich, sustainable and innovative economy. This requires the formation of a
favorable business environment, technological modernization and the development of human
potential. A comparative analysis of countries shows that even a moderate increase in the
professional training of workers can significantly increase the share of high-tech exports.
Thus, a comprehensive and strategic approach to human capital development – through
systemic investments, adaptation of educational programs and international cooperation – is a
prerequisite for increasing export competitiveness and sustainable growth of developing
economies.
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