Abstract

The study analyses the determinants of national competitiveness in Central and Eastern Europe, with a primary focus on the role of human capital. The primary objective of this study is to identify disparities in the levels of competitiveness and human capital between the V4 countries and other countries in the Central and Eastern European region. The subsequent objective is to identify the impact of year-on-year changes in human capital on competitiveness across the entire region under study in the context of other key macroeconomic and institutional determinants. In the comparative section of the study, a panel regression model with random effects and robust standard errors according to Arellano was utilized. Conversely, a model with fixed effects and robust standard errors (PCSE), employing first differences of variables with a two-year lag, was employed to identify the determinants of competitiveness. The findings of the comparative analysis demonstrated the presence of statistically significant disparities between the V4 countries and other countries in the Central and Eastern European region, exclusively in the domain of human capital. The level of competitiveness is similar across the entire region. The findings of the panel regression analysis demonstrated that year-on-year changes in the quality of human capital do not exert a statistically significant impact on the WCI with a two-year lag. This finding contradicts the theoretical assumptions that underpin the WCI. The predominant factors influencing competitiveness were identified as the control variables of government effectiveness, the inflation rate, and the level of gross debt. The originality of the study lies primarily in the use of a comprehensive WCI instead of partial competitiveness indicators and in the integration of multiple institutional and macroeconomic aspects into the model, thereby filling an existing gap in literature.

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