The Relationship Between the Industry-Level Economic Development and Human Development in Latvia

Abstract

Research purpose. There is some empirical evidence of the relationship between economic and human development at a country level. Human development is most frequently proxied by the Human Development Index (HDI). Considering the fact that HDI is a measure covering the fields of several Sustainable Development Goals (SDGs), the overwhelming idea of the research is to determine the impact of sector economic development on the achievement of SDGs. The research goal is to establish if there is a relationship between economic development, using Latvian sector statistics, and the human development of Latvia. Design / Methodology / Approach. The paper uses different types of regression analyses of the longitudinal data to determine if there is a relationship between HDI and economic development indicators in different sectors of the Latvian economy. The sample includes industry-level data on eight industries and HDI data collected from 2010 to 2020. The regression analysis was applied to HDI as a dependent variable, and a selected set of industry variables was assessed as a group of independent variables (both individual for industries and aggregated on the country level). The set included the indicators of the turnover of companies, number of companies, added value, total personal costs and number of employees in full-time employment. Findings. The findings partly support the proposal that economic development relates to human development because some factors of economic growth have formed a statistically strong relationship with HDI (added value, total personal costs, and the number of employees in full-time employment), while others have not (turnover and number of companies). The fact that some statistically proven relationships had a positive while others had a negative direction suggests that the relationship between economic development and human development is bidirectional depending on specific indicators. Originality / Value / Practical implications. There is an obvious research gap in the investigated field in Latvia and even in the Baltics. The current paper contributes to the knowledge base about factors affecting human development and enlarges the statistical data basis. Besides, this study contributes to the development of national strategic plans by determining which sectors and which indicators have a significant impact on HDI. Research information will be useful for the NAP report after 2027 for assessing the level of achievement of strategic goals, especially in the priorities “Strong families, healthy and active people”, “Knowledge and skills for personal and national growth”, and “Competitiveness and material well-being of companies”.