ENHANCING MECHANISMS FOR FINANCING HUMAN CAPITAL DEVELOPMENT

Abstract

The article examines the transformation of the system for financing human capital development in Ukraine under wartime challenges and post-war recovery, taking into account fiscal constraints and the increasing role of international financial support. It is determined that human capital is a key factor of economic growth and state resilience, while its financing acquires strategic importance amid profound socio-economic transformations. The dynamics and structure of consolidated budget expenditures of Ukraine on education, healthcare, and social protection for the period 2015–2025 are analyzed, which made it possible to identify the main trends in their changes under the influence of the COVID-19 pandemic and full-scale armed aggression. It is established that there is a redistribution of budget priorities in favor of social protection alongside a relative decline in expenditures on education and healthcare. It is substantiated that the traditional financing model, focused on maintaining a network of budgetary institutions, is gradually transforming into a more flexible system based on the principles of targeting, performance, and efficiency in the use of resources. The role of innovative financial instruments, including state grants, vouchers, targeted support programs, and the “money follows the recipient” mechanism, is revealed as contributing to improved accessibility and quality of social services. It is found that the introduction of new approaches to financing education, healthcare, and social protection is accompanied by increased competition, enhanced transparency of financial flows, and a stronger results-oriented focus. Special attention is paid to the role of international financial assistance and European instruments in shaping the modern architecture of human capital financing, which provide additional resources and facilitate the implementation of advanced governance standards. The main problems of the system’s functioning are identified, including insufficient financial resources, imbalance between declared commitments and actual funding, unequal access to services, and the presence of informal practices. It is proven that further development of the human capital financing system requires diversification of funding sources, expansion of public-private partnerships, strengthening the role of local budgets, and improving the efficiency of resource utilization based on performance-oriented management. The necessity of forming a sustainable, adaptive, and long-term results-oriented system of financial support capable of ensuring the recovery and development of Ukraine’s human potential is substantiated.