Socially Responsible Investment in Human Capital
An overview of contemporary economical concepts of sustainable capital, human-resource capitalism, sustainable development, sustainable society, and socially responsible investment is made. The main features of a sustainable society are examined. The problem of measurement of the impact of social in...
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Міжнародний науково-навчальний центр інформаційних технологій і систем НАН та МОН України
2017
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| Cite this: | Socially Responsible Investment in Human Capital / О. Tutova // Економіко-математичне моделювання соціально-економічних систем: Зб. наук. пр. — К.: МННЦІТС НАН та МОН України, 2017. — Вип. 22. — С. 149-159. — Бібліогр.: 6 назв. — англ. |
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Digital Library of Periodicals of National Academy of Sciences of Ukraine| _version_ | 1859469284450762752 |
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| author | Tutova, О. |
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| citation_txt | Socially Responsible Investment in Human Capital / О. Tutova // Економіко-математичне моделювання соціально-економічних систем: Зб. наук. пр. — К.: МННЦІТС НАН та МОН України, 2017. — Вип. 22. — С. 149-159. — Бібліогр.: 6 назв. — англ. |
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| description | An overview of contemporary economical concepts of sustainable capital, human-resource capitalism, sustainable development, sustainable society, and socially responsible investment is made. The main features of a sustainable society are examined. The problem of measurement of the impact of social investment in human development is analyzed.
Проведено огляд сучасних економічних концепцій стійкого капіталу, людино-ресурсного капіталізму, стійкого розвитку, стійкого суспільства і соціально відповідального інвестування. Досліджені основні риси стійкого суспільства. Проаналізована проблема вимірювання впливу соціального інвестування у людський розвиток.
Проведен обзор современных экономических концепций устойчивого капитала, человеко-ресурсного капитализма, устойчивого развития, устойчивого общества и социально ответственного инвестирования. Исследованы основные черты устойчивого общества. Проанализирована проблема измерения влияния социального инвестирования в развитие общества.
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| first_indexed | 2025-11-24T06:22:48Z |
| format | Article |
| fulltext |
– 2017, 22
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12. .
// , 1, – 2005. – 113
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13. Meeusen W. Efficiency Estimation from Cobb-Douglas Production
Functions with Composed Error / J. van den Broeck // International
Economic Review 18. – 1977. – 435-44 p.
14. Aigner, D.J. Formulation and estimation of stochastic frontier
production functions / C.A.K. Lovell, P. Schmidt, // Journal of
Econometrics. – 6:21. – 37 p.
15. . .
//
. . – 2015. – . 3(16). – 53-
58 .
16. . .
//
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.18, . 2. – . 189-194 .
17. .
//
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– 1 (07). 2. – 2017. – 107-112 .
364.2:331 . Tutova
Socially Responsible Investment in Human Capital
An overview of contemporary economical concepts of
sustainable capital, human-resource capitalism, sustainable
development, sustainable society, and socially responsible
investment is made. The main features of a sustainable society
are examined. The problem of measurement of the impact of
social investment in human development is analyzed.
– 2017, 22
150
Key words: human-resource capitalism, human capital,
sustainable development, sustainable society, sustainable
capital, socially responsible investment, labour economics,
technical economics.
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Introduction. The concept of human capital comes from
the economic model of human-resource capitalism, which
emphasizes the relationship between improved productivity
and the need for long-term investments in the development of
human resources. This model can be applied on a broad scale
where investments in human capital are viewed as affecting
– 2017, 22
151
national and global economic performance or, more narrowly,
where investments in people are viewed as crucial to
organization performance. That differs from a more traditional
approach where human resources are primarily seen as a cost to
be contained beyond immediate and short-term needs. This
short-term view often addresses change or poor performance
by seeking government intervention to offset competition and
by using cutback methods for keeping wages down, contracting
out, and automating jobs.
A human-resource capitalism model argues that the
principal source of productive capacity, whether in an economy
or organization, rests in the capacity of people. Therefore,
strategies need to be developed to capitalize on the potential of
this resource by developing learning systems that will cause the
capacity of human capital to grow into the future. For a
national economy, this may entail reforming educational
institutions to ensure the provision of a quality workforce that
fits the needs of industry for high economic productivity and
the maintenance or improvement of the national quality of life
[1-3].
Analysis of recent researches. Classical and neoclassical
economics regard capital as one of the factors of production
(alongside the other factors: land and labour). All other inputs
to production are called intangibles in classical economics.
This includes organization, entrepreneurship, knowledge,
goodwill, or management (which some characterize as talent,
social capital or instructional capital) [2].
This is what makes it a factor of production:
1) The good is not used up immediately in the process of
production unlike raw materials or intermediate goods. (The
significant exception to this is depreciation allowance, which
like intermediate goods, is treated as a business expense);
– 2017, 22
152
2) The good can be produced or increased (in contrast to
land and non-renewable resources).
Marxian economics distinguishes between different
forms of capital:
1) constant capital, which refers to capital goods,
2) variable capital, which refers to labor-inputs, where the
cost is "variable" based on the amount of wages and salaries
are paid throughout the duration of an employee's
contract/employment,
3) fictitious capital, which refers to intangible
representations or abstractions of physical capital, such as
stocks, bonds and securities.
Earlier illustrations often described capital as physical
items, such as tools, buildings, and vehicles that are used in the
production process. Since at least the 1960s economists have
increasingly focused on broader forms of capital. For example,
investment in skills and education can be viewed as building up
human capital or knowledge capital, and investments in
intellectual property can be viewed as building up intellectual
capital.
Theories of sustainability attempt to prioritize and
integrate social responses to environmental and cultural
problems. An economic model looks to sustain natural and
financial capital.
Sustainable development is the organizing principle for
meeting human development goals while at the same time
sustaining the ability of natural systems to provide the natural
resources and ecosystem services upon which the economy and
society depends. The desirable end result is a state of society
where living conditions and resource use continue to meet
human needs without undermining the integrity and stability of
the natural systems. Such a society can be called a sustainable
society.
– 2017, 22
153
Unsolved problems. There is still no commonly accepted
definition of sustainable capital. Nevertheless, theoretical
essentials of human capital and socially responsible investment
in it are the subject for research for many studies. Though, due
to its complexity issues of human development are still not
examined completely. Taking into consideration the
importance of this field for the whole mankind, comprehensive
studies of human development should be continued.
Goal. The goal of this article is to research a human
capital as a form of capital, to make a brief overview of
contemporary economical concepts of sustainable capital,
human-resource capitalism, sustainable development,
sustainable society, and socially responsible investment.
The main features of a sustainable society will be
examined in this paper. Also the problem of measurement of
the impact of social investment into human development
should be considered.
Methods of economical and mathematical analysis can be
used to calculate the interdependencies between socially
responsible investment and human capital.
The bulk material. There are five types of sustainable
capital from where we derive the goods and services we
need to improve the quality of our lives (Pic. 1).
Natural Capital is any stock or flow of energy and
material that produces goods and services [2]. It includes:
1) Resources - renewable and non-renewable materials;
2) Sinks or treatment plants- that absorb, neutralise or
recycle wastes;
3) Processes - such as climate regulation.
Natural capital is the basis not only of production but of
life itself.
– 2017, 22
154
Pic. 1. Five types of sustainable capital.
Human capital consists of people's health, skills,
education, knowledge, motivation, capacity and attributes of
labour which influence their productive capacity and earning
potential. All these things are needed for productive work.
According to the Organisation for Economic Co-
operation and Development (OECD), human capital is defined
as “the knowledge, skills, competencies and other attributes
embodied in individuals or groups of individuals acquired
during their life and used to produce goods, services or ideas in
market circumstances”.
Individual human capital – the skills and abilities of
individual workers
– 2017, 22
155
Human capital of the economy is the aggregate human
capital of an economy [4].
Social Capital concerns the institutions that help people
maintain and develop human capital in partnership with others;
e.g. families, communities, businesses, trade unions, schools,
and voluntary organisations.
Manufactured Capital comprises material goods or fixed
assets which contribute to the production process rather than
being the output itself – e.g. tools, machines and buildings.
Financial Capital plays an important role in our
economy, enabling the other types of Capital to be owned and
traded. But unlike the other types, it has no real value itself but
is representative of natural, human, social or manufactured
capital; e.g. shares, bonds or banknotes.
The world is facing a sustainability crisis because the
humanity is consuming its stocks of natural, human and social
capital faster than they are being produced. Unless we control
the rate of this consumption, we can't sustain these vital stocks
in the long-term.
By maintaining and trying to increase stocks of these
capital assets, people can live off the income without reducing
the capital itself. But for this to happen, it is the responsibility
of every country, organisation or otherwise, to manage these
capital assets sustainably.
Sustainable development is the best way to manage these
capital assets in the long-term. It is a dynamic process through
which organisations can begin to achieve a balance between
their environmental, social and economic activities.
The features of a sustainable society fit into the separate
five capitals. If we invest appropriately in all capital stocks,
and achieve the flow of benefits, the following statements
would be true. They represent the outcome of a successful
– 2017, 22
156
capital investment strategy for sustainable development - that
is, a sustainable society.
A sustainable society is featured by:
Natural Capital:
1) In their extraction and use, substances taken from the
earth do not exceed the environment's capacity to disperse,
absorb, recycle or otherwise neutralise their harmful effects (to
humans and/or the environment);
2) In their manufacture and use, artificial substances do
not exceed the environment's capacity to disperse, absorb,
recycle or otherwise neutralise their harmful effects (to humans
and/or the environment);
3) The capacity of the environment to provide ecological
system integrity, biological diversity and productivity is
protected or enhanced;
Human Capital:
1) At all ages, individuals enjoy a high standard of health;
2) Individuals are adept at relationships and social
participation, and throughout life set and achieve high personal
standards of their development and learning;
3) There is access to varied and satisfying opportunities
for work, personal creativity, and recreation;
Social Capital:
1) There are trusted and accessible systems of governance
and justice;
2) Communities and society at large share key positive
values and a sense of purpose;
3) The structures and institutions of society promote
stewardship of natural resources and development of people;
4) Homes, communities and society at large provide
safe, supportive living and working environments;
– 2017, 22
157
Manufactured Capital:
All infrastructure, technologies and processes make
minimum use of natural resources and maximum use of human
innovation and skills;
Financial Capital:
Financial capital accurately represents the value of
natural, human, social and manufactured capital.
The way to achieve the sustainable society is socially
responsible investment.
Socially responsible investing (SRI), or social
investment, also known as sustainable, socially conscious,
"green" or ethical investing, is any investment strategy which
seeks to consider both financial return and social good to bring
about a social change.
Recently, it has also become known as "sustainable
investing" or "responsible investing". There is also a subset of
SRI known as "impact investing", devoted to the conscious
creation of social impact through investment.
Social investment is about investing in human capital. It
means policies designed to strengthen people’s skills and
capacities and support them to participate fully in employment
and social life. Key policy areas include education, quality
childcare, healthcare, training, job-search assistance and
rehabilitation [5].
There is a crucial point of all studies about human capital
how to measure it, how to quantify the investments needed into
its development, how to count the capital flows it produces.
There is a whole industry in the field of labour
economics, in which quantifiable proxies are found for some of
the more elusive, less quantifiable aspects of human capital –
e.g., years of education are used as a proxy for knowledge;
years on the job as a proxy for skill; and sometimes age as a
proxy for experience. These numbers are then fed into
– 2017, 22
158
econometric calculations in order to discover how much of the
difference in people’s income they can account for [6].
At the same time, it is necessary to recognize that such
analysis may also be leaving out important variables for which
it has been impossible to find adequate, quantifiable proxies.
Also the methods of technical economics are used in
order to measure social investments in human capital. These
methods and techniques include econometrics, input-output
analysis, linear programming, the economics of energy and
other recourses, project feasibility studies, and others.
It is very important to define the indicators that describe
precisely the social investments and their impact on human
development, the interdependencies between socially
responsible investment and human capital.
Summary. Further research and comprehensive study of
different aspects of human capital within the framework of the
theory of sustainable society and sustainable development
should be developed. The fact that human capital is a form of
capital is substantiated by many contemporary economic
studies and concepts.
The next step is to build a system of factors that describe
adequately and precisely the main aspects of social investments
in human capital. There is a need to quantify the
independencies between social investment and human capital
in order to determine the economic effect of such investments.
Economic and mathematical methods should be used for these
purposes.
References
1. https://www.britannica.com/topic/human-capital#ref1181263
2. .
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. . . 17 // . .
– . . , . . – .:
– 2017, 22
159
, 2012. – 379 . – . 119-129.
3. https://en.wikipedia.org/wiki/Capital_(economics)
4. https://www.forumforthefuture.org/project/five-capitals/overview
5. Kean Birch 1, Les Levidow and Theo Papaioannou. Sustainable
Capital? The Neoliberalization of Nature and Knowledge in the
European “Knowledge-based Bio-economy” – Sustainability 2010, 2,
13 September 2010. – P. 2899-2918.
6. Neva R. Goodwin. Five Kinds of Capital: Useful Concepts for
Sustainable Development. – Global Development and Environment
Institute, Working Paper No. 03-07, September 2003. – P. 1-12.
: 330.4:004.22 .
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| id | nasplib_isofts_kiev_ua-123456789-132556 |
| institution | Digital Library of Periodicals of National Academy of Sciences of Ukraine |
| issn | XXXX-0009 |
| language | English |
| last_indexed | 2025-11-24T06:22:48Z |
| publishDate | 2017 |
| publisher | Міжнародний науково-навчальний центр інформаційних технологій і систем НАН та МОН України |
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| spelling | Tutova, О. 2018-04-21T14:02:17Z 2018-04-21T14:02:17Z 2017 Socially Responsible Investment in Human Capital / О. Tutova // Економіко-математичне моделювання соціально-економічних систем: Зб. наук. пр. — К.: МННЦІТС НАН та МОН України, 2017. — Вип. 22. — С. 149-159. — Бібліогр.: 6 назв. — англ. XXXX-0009 https://nasplib.isofts.kiev.ua/handle/123456789/132556 364.2:331 An overview of contemporary economical concepts of sustainable capital, human-resource capitalism, sustainable development, sustainable society, and socially responsible investment is made. The main features of a sustainable society are examined. The problem of measurement of the impact of social investment in human development is analyzed. Проведено огляд сучасних економічних концепцій стійкого капіталу, людино-ресурсного капіталізму, стійкого розвитку, стійкого суспільства і соціально відповідального інвестування. Досліджені основні риси стійкого суспільства. Проаналізована проблема вимірювання впливу соціального інвестування у людський розвиток. Проведен обзор современных экономических концепций устойчивого капитала, человеко-ресурсного капитализма, устойчивого развития, устойчивого общества и социально ответственного инвестирования. Исследованы основные черты устойчивого общества. Проанализирована проблема измерения влияния социального инвестирования в развитие общества. en Міжнародний науково-навчальний центр інформаційних технологій і систем НАН та МОН України Економіко-математичне моделювання соціально-економічних систем Socially Responsible Investment in Human Capital Article published earlier |
| spellingShingle | Socially Responsible Investment in Human Capital Tutova, О. |
| title | Socially Responsible Investment in Human Capital |
| title_full | Socially Responsible Investment in Human Capital |
| title_fullStr | Socially Responsible Investment in Human Capital |
| title_full_unstemmed | Socially Responsible Investment in Human Capital |
| title_short | Socially Responsible Investment in Human Capital |
| title_sort | socially responsible investment in human capital |
| url | https://nasplib.isofts.kiev.ua/handle/123456789/132556 |
| work_keys_str_mv | AT tutovao sociallyresponsibleinvestmentinhumancapital |