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“The greatest improvement in the productive powers of labor, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labor” is the opening sentence of Adam Smith's Wealth of Nations. According to Smith market dimension determines the level of specialization. Specialization implies more knowledge. The final result is higher growth. After Smith economists did not pay any more attention to human capital. Their attention was kept by population (Malthus) or by physical capital stock (neoclassic school). At the beginning of the sixties of the XX century Gary Backer published his fundamental contribution to the theory of human capital. This paper examines the basic features of Backer's model. The focus is on how a country can generate a competitive advantage in the production of human capital. Human capital has grown rapidly in both US and EU where represents a wide fraction of total capital. Investment in education is thus more and more the core engine of long run growth. Subsequently on the base of Backer's theory the paper examines the case of EU and “Europe 2020” strategy. Final considerations will deal with Turkey's economic development and the need for a quality education policy, based on investments and on market incentives, bound to guarantee growth sustainability. [ABSTRACT FROM AUTHOR]

Research background: The processes of economic convergence observed in many developing countries are characterized by reduction of economic differences on the cross-country level, which are accompanied by growing internal economic inequalities. This may stem from the fact that in the catching-up countries, a more dynamic growth pattern is observed in the economically strongest regions, which is initially reflected in spatial polarization and increasing regional inequalities. However, just as the countries reach higher levels of development, the diffusion of growth-inducing impulses to less-developed areas should lead to the spatial equalizing of the development levels and reducing regional inequalities. Purpose of the article: The aim of the paper is to determine the relationship between the level of economic growth and observed economic inequalities in Central and Eastern European (CEE) countries. The theoretical framework adopted to describe and explain those relations is the so-called Williamson's hypothesis in which the relationship between the scale of regional inequalities and economic growth is illustrated by a curve shaped like an inverted U. Methods: The research procedure was intended to verify Williamson's hypothesis by estimating parabolic econometric models. Indicators of economic growth along with measure of regional inequalities (Williamson's coefficient of variation) were used in the regression modeling. The research period spanned the years 1995-2014. Findings & Value added: In the light of the study of CEE countries, it was possible to observe both convergence symptoms as well as divergence tendencies. It can be thus stated that the analyzed CEE countries followed a similar path to the one observed earlier by Williamson in other developing countries. However, the analyses conducted by the authors at the national and regional levels of CEE countries were equivocal and did not fully support the theoretical assumptions of Williamson's hypothesis. [ABSTRACT FROM AUTHOR]

To maintain the growth rate and insure the secure and sustainable development of economies, EU countries have to come up with and manage a new source of growth - intangible resources. The intangible resources are relatively a new concept analyzed in scientific literature. A diverse, multi-angle and complex nature of intangible resources can be treated as a new factor in production function. In the knowledge based economy, creativity, generation of knowledge and transmission of it must interact with each other and be combined with entrepreneurship skills. Only interaction between these three key intangible resources could ensure the transition of economy to a new stage of economic development. The purpose of the research paper is to reveal econometrical relationship between intangible resources and its impact on economy in the EU. As a result of analysis, the theoretical framework to evaluate intangible resources has been provided and the accumulation level of intangible resources in EU countries has been estimated. The econometrical relationship suggests the intangible resources have a very important impact on GDP accumulated level. The findings reveal that highest level of intangible resources is observed in Finland, Sweden, Germany, Denmark and Luxembourg. The lowest rate of intangible resources is observed in Cyprus, Romania, Poland, Bulgaria, Lithuania, Latvia and Greece. The conducted research also revealed that there is a strong statistical relationship between input and output of intangible resources. The constructed econometrical model suggests that the modern economic growth much depends on the level of accumulated intangible resources in the country. The change of estimated composite indicator of intangible resources by 1% influences the change of GDP by 0.954% [ABSTRACT FROM AUTHOR]

This paper provides new evidence of the impact of government spending on economic growth in the European Union countries. Governments can adjust their levels of spending in order to influence their economies, although the relationship between these variables can be positive or negative, depending on the countries included in the sample, the period of estimation and the variables which reflect the size of the public sector. The results obtained based on regression and panel techniques suggest that government expenditure is not clearly related with economic growth in the European Union countries over the period 1994-2012. [ABSTRACT FROM AUTHOR]

The paper examines the causal relation between the stock markets development and economic growth in the EU countries. In particular, the nature and causality direction is investigated. Panel data techniques including cointegration tests, vector error correction models and Granger causality tests were applied to indicate the nature and direction of causality. Long-run effects of the economic growth upon stock market development was detected in the sample of the Euro area member countries. In addition, the short-run mutual relations between growth and stock markets were indicated in that country-sample. In the non-Euro area countries, only short-run impact of the stock market development upon economic growth was found. The empirical findings bring up implications for macroeconomic stabilization and development policies. The indicated relations also play a role in predicting economic growth and stock markets' development. [ABSTRACT FROM AUTHOR]

Financial integration contributes to the development of the financial system by increasing competition, increasing stability, and the efficiency of financial intermediation, resulting in lower intermediation costs and a more efficient capital allocation. Financial integration increases the depth and liquidity of financial markets and thus enhances the resilience of the European financial system. The purpose of this paper is to analyze the impact of European financial integration on economic growth using the factors through which financial integration affects growth. Thus will be seen which of these factors had a significant impact on economic growth in the EU countries. [ABSTRACT FROM AUTHOR]