The observer countries of the Arctic Council: a comparative analysis of human development

In accordance with the latest trends in the evolution of the modern economy, its main potential is its people. Investment in human capital, ability to develop new technologies and turn them into the world market demanded product are recognized by the international community as the most favorable conditions for the growth of competitiveness of economies and are the key to social security and prosperity. In order to obtain a synergistic effect in the times of the new industrial development of the Arctic zone of the Russian Federation (RFAZ) and forcing an integrated and balanced spatial development of the region, our country could combine its financial, economic and technological capabilities with the ones of the other interested parties, including twelve observer countries of the Arctic Council that form a group of AC-12: France, Germany, the Netherlands, Poland, Spain, United Kingdom, China, Italy, Japan, Korea, Singapore and India1. In the context of the resumption of a full-fledged economic activity in the circumpolar areas, it seems interesting to carry out a comparative analysis of the human capital of the AC observers and to assess their resources and potential objectively.

Human development

The main place in the structure of the Arctic farms is occupies by the following sectors: mining (extraction of diamonds, rare metals, platinum group metals, nickel and cobalt), fishing and natural gas extraction. Oil and gas extraction is on the first place almost everywhere; a significant role is played by as transport, communications, and construction work, wholesale and retail trade. Joint efforts are needed to resolve the environmental issues (climate change, human security and the environment, use of natural resources), various economic problems (extraction of hydrocarbons on the continental shelf, exploitation of the Northern Sea Route, the modernization of the energy and transport systems, including port infrastructure and the development of new shipping routes) and social problems (rescue service and improvement of the quality of life of the population). There is a great need in joint research, scientific and technical cooperation in the field of shipbuilding, engineering, information and communication, energy-saving technology and innovation, and the development of tourism.

The complexity of these sectors is caused by the high costs of transportation, lack of maritime infrastructure, extreme climate and remote resource fields and reserves. Today a need to diversify the economic structure, increase the proportion of deep processing industry, investment attractiveness and new technology arise, and this, in turn, places special demands on personnel and the quality of the “human factor”.

The UN Development Program (UNDP) made a significant contribution to the understanding and promotion of the ideas and parameters of human development. Under this Program global Human Development Reports have been published since 1990. The UNDP experts proposed an analytical tool — the Human Development Index (range from 0 to 1; the closer to one, the greater are the opportunities for realizing human potential) which is calculated on the basis of economic analysis (Gross National Income — GNI) and social indicators (life expectancy and level of education). Table 1 presents the latest data on the HDI in countries belonging to the AC-12 and its constituent components.

According to the UNDP’s studies, Human Development Index (HDI) has steadily grown over the years 1980—2013 in all the AC-12 countries. Ten out of twelve of observers from the AC are among the countries with very high HDI level. China (as well as the Russian Federation) and India are countries with high and medium HDI countries respectively.

Table 1

Countries rated by HDI	HDI 2013 (rating from 187 countries / value)	Life expectancy2, years, 2013	Medium / school life expectancy3 , 2012	GNI per capita, $4, 2013
Netherlands	4 / 0.915	81.0	11.9 / 17.9	42397
Germany	6 / 0.911	80.7	12.9 / 16.3	43049
Singapore	9 / 0.901	82.3	10.2 / 15.4	72371
Great Britain	14 / 0.892	80.5	12.3 / 16.2	35002
Korea (Rep.)	15 / 0,891	81.5	11.8 / 17.0	30345
Japan	17 / 0.890	83.6	11.5 / 15.3	36747
France	20 / 0.884	81.8	11.1 / 16.0	36629
Italy	26 / 0.872	82.4	10.1 / 16.3	32669
Spain	27 / 0.869	82.1	9.6 / 17.1	30561
Poland	35 / 0.834	76.4	11.8 / 15.5	21487
China	91 / 0.719	75.3	7.5 / 12.9	11477
India	135 / 0,586	66.4	4.4 / 11.7	5150
		Reference:
Russia	57 / 0.778	68.0	11.7 / 14.0	22617

Source: United Nations Development Program (UNDP) Human Development Report, 2014. Sustaining Human Progress: Reducing Vulnerabilities and Building Resilience [1, 2014].

The Human Development Index of the observer countries and its components

Most of countries of this group have the GNI level higher than the level of the Russian Federation (except for India, China and Poland). This trend is also valid for life expectancy (except India) and formal learning settings. At the same time a demographic indicator as fertility rate (births per woman) in all countries of the AC-12, except for India, is less than the one required for simple reproduction of the population (it is relatively high and continues to grow only in France and the UK); the average age of the population tends to increase due to the low birth rate and high life expectancy.

According to forecasts, in most studied countries (except Germany, Poland and Japan), in the medium term perspective the population will increase most strongly in the UK and France. In these countries, as well as in the Netherlands the larger share of state’s expenses is devoted to education and health of citizens.

Table 2 presents some specific indicators of human development 5 in the AC-12 countries.

Table 2

Country	Population, mln. Persons., In 2013 / outlook for 2030	Government spending on education / health, 2012/2011 years.,% Of GDP	Population with at least secondary education, 2012,% of individuals older than 25 years	Quality education, academic performance 15-year-olds students: GPA *
				Mathematics	Science education
Great Britain	63.1 / 68.6	5.6 / 9.3	99.9	494	514
Germany	82.7 / 79.6	5.1 / 11.1	96.6	514	524
India	1 252.1 / 476.4 1	3.3 / 3.9	38.7	...	...
Spain	46.9 / 48.2	5.0 / 9.4	69.9	484	496
Italy	61.0 / 61.2	4.5 / 9.5	75.7	485	494
China	1 385.6 / 453.3 1	... / 5.2	65.3	613	580
Korea (Rep.)	49.3 / 52.2	5.0 / 7.2	82.9	554	538
Netherlands	16.8 / 17.3	6.0 / 12.0	89.0	523	522
Poland	38.2 / 37.4	5.2 / 6.7	82.3	518	526
Singapore	5.4 / 6.6	3.3 / 4.6	77.4	573	551
France	64.3 / 69.3	5.9 / 11.6	80.5	495	499
Japan	127.1 / 120.6	3.8 / 9.3	86.4	536	547
		Reference:
Russia	142.8 / 133.6	4.1 / 6.2	90.9	482	486

* Average for OECD countries on these subjects 494 and 501.

Source: United Nations Development Program (UNDP) Human Development Report, 2014. Sustaining Human Progress: Reducing Vulnerabilities and Building Resilience [1, 2014]

Human development: demography, health and education

At the same time, Asian economies performed better quality of education in technical subjects. In Russia in the coming years — a considerable negative population growth will be observed and the state’s spending on education and health is going to be significantly lower than in other countries (excluding China and India), the quality of education6 is not that high, according to experts of UNDP (author agrees only partly with the latter). Sustainable development requires the measures to ensure the region's economy with qualified specialists: biologists, geographers, chemists, geologists and geophysicists, mining and construction engineers, ecologists, and also teachers, doctors, IT specialists, and managers in tourism. In recent years, attention of the federal authorities of Russia to the further study of high-latitude regions of our country and their social and economic development has increased. In May of 2015 the state provided more than 205 million rubles for the Arctic expeditions and supply of the “North Pole” drifting station [2,

2015]. Higher education in the Arctic is represented by the Northern (Arctic) Federal University and the Far East and North-Eastern Federal Universities — the largest scientific, educational and innovative centers in the polar areas of Russia.

Workforce competitiveness

The development of science and technology is an important means to achieve a high level of professional competence, it has a positive impact on human health, and its introduction into education is the key to the competitiveness of the workforce. Thus, there is an increase of living standards, which serves to increase the productivity and profitability of production, income and quality of life. The statistical analysis gives reason to believe that there is a direct relationship between the level of human development and competitiveness: the more is the first, the higher place is taken by the country in the world ranking of competitiveness.

The World Economic Forum (WEF) publishes data on the Global Competitiveness Index (GCI) annually. It is calculated on the basis of more than 100 indicators, combined into 12 main components (each component is accounted for between 4 and 21 parameters).

Table 3 presents the ones related to the level of human development and have a crucial impact on the competitiveness of the workforce: health and primary education, higher education and training, labor market efficiency, technological level, innovative potential.

Rating the competitiveness of the AC-12

Table 3

Country / GCI index (place in the ranking of 144 countries)	Health and primary education	Higher education and prof. training	Labor market efficiency	Technological readiness	Innovation
Singapore / 2	3	2	2	7	9
Germany / 5	14	16	35	13	5
Japan / 6	5	21	22	20	4
Netherlands / 8	5	3	21	9	8
UK / 9	21	19	5	2	12
France / 23	18	28	61	17	19
Korea (Rep.) / 26	27	23	86	25	17
China / 28	46	65	37	83	32
Spain / 35	34	29	100	27	37
Poland / 43	39	34	79	48	42
Italy / 49	22	47	136	38	35
India / 71	98	93 Reference:	112	121	49
Russia / 53	56	39	45	59	65

Source: World Economic Forum. The Global Competitiveness Report 2014-2015. URL:http://www. wefo (Accessed: 06.05. 2015). [3, 2014—2015]

It should be noted that the calculation of the index is done taking into account the fact that: different states are at different stages of economic development; they have different circumstances contributing to increasing the competitiveness of one country; and these circumstances may not be relevant for another country.

The WEF distinguishes between three types of economy — the economy, driven by factors (India); by efficiency (China) and by innovation (France, Germany, Italy, Japan, Republic of Korea, Netherlands, Singapore, Spain, UK). Poland (and Russia) is on the intermediate stage between the 2nd and 3rd stage (determined by the GDP in US dollars per capita, respectively — less than 2 million, 9.3 million, more than 17 thousand).

Five of the twelve states are among the top ten of the most competitive countries in the world according to the WEF. Russia is much lower in the rankings, although it has risen very substantially in the rankings over the past few years (by 14 points since 2012), and is ahead of only India, which, however, shows better than our country performance in the area of development and innovation. On the parameters “Health and primary education” and “Technological readiness” our country is far behind the group of AC-12 (except for India in the first case, and India and China in the second), especially Singapore, Japan, the Netherlands and the UK. The best Russian results according to parameters shown in Table 3 are for: "Higher education and vocational training" — ahead of China, Italy and India and "Labor market efficiency" — Russia is ahead of six of the twelve countries, but it is significantly behind Singapore and the UK. Russia is the worst according to the “ Innovation” parameter: “champions” in this area are Japan, Germany, the Netherlands and Singapore. Cooperation with the leaders in the training, transfer of technologies in the field of shipbuilding, ocean technology and marine infrastructure are important for effective work of the civil shipbuilding (drilling platforms, shelf extraction equipment, specialized ice-class vessels), which influences the capacity of the Russian presence in the Arctic and increasing the economic efficiency of oil and gas projects on the continental shelf.

Conclusion

It is well known that eight countries are permanent members of the Arctic Council: Canada, Denmark, including Greenland and the Faroe Islands, Finland, Iceland, Norway, Russia, Sweden and the United States, forming the AC-8 group. Permanent membership is gained by six international organizations representing Arctic indigenous peoples 7. Among 12 observer-states of the Arctic Council (AC-12) nine are members of the Organization for Economic Cooperation and

Against the background of high socio-economic indicators of the majority of AC-12 countries there is a redistribution of the financial capacity aimed at providing a high level of hu-man/employee development. This is important because large international professional teams that are working in the Arctic should meet new requirements: the availability of a variety of skills; willingness (motivation) for continuous training and development of new professional skills; the ability to respond to the changing situation quickly and to solve complex multi-factor problems. Accumulated human abilities and qualities, motivation, knowledge and professional competencies, formed as a result of investment in human capital, could be regarded a key element of the resource supply base of the economy and the decisive factor of creation and development of new technologies.

An analysis of human capital development in 12 observer-countries of the Arctic Council (AC-12) creates a positive outlook of the human capital development there and could give a lot of benefits for our country when implementing important socio-economic projects in the Russian part of the Arctic.