We live in an era when in many countries worldwide, including Latvia, the modern global developments have led to further establishment of new living standards and human capital formation appropriate for this particular time. The goal of the research is to examine the theoretical aspects of the competency model, analyse the role of education in economics and formation of human capital and competencies, as well as analyse the development of education quality and services in the context of sustainable development. Research methods are the analysis and synthesis of scientific literature, logical and comparative analysis. On the basis of the theoretical studies made, the authors conclude that in the context of competence-based sustainable development and high-quality workforce of the region, education performs multiple functions, such as, being the major factor of public labour force formation in terms of interconnection of mental and physical abilities; accumulated intellectual potential; economic culture promotion factor; factor of establishing harmonization of public interests; characteristics of the quality of workforce and part of workforce reproduction. The results show that socio-economic nature of education in forming human capital can be expressed as a set of regularities that refers to formation and functioning of labour force (human resources) and corresponds to the present needs and opportunities. Full perception of all economic regularities makes it possible to scientifically substantiate the role of education quality which directly establishes the role of human competence-based development.