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HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH: EVIDENCE FROM NIGERIA

ABSTRACT

This study attempts to provide empirical evidence on the role of human capital development (proxied by federal government expenditure on health, education, health, gross fixed capital formation, primary, secondary and tertiary school enrolment and other social and community services) on economic development process from 1980 to 2012. The study applied the autoregressive distributed lag (ARDL) bounds testing approach to cointegration. The estimated long run relationship established the positive contribution of human capital development in the economic growth process of Nigeria. The impact however is low relatively to the contributions of physical capital accumulation. For a sustainable economic growth in Nigeria, the study posits that government should make a conscious effort to encourage the establishment of labour intensive industries, restructure the educational system coupled with good governance.

CHAPTER ONE

INTRODUCTION

1.1     Background to the Study

Nigeria with a population of approximately 168.8 million spread over an area of about 923,800sq. kilometers is among the few nations in the universe amply blessed with abundant human and natural resource for development. The existence of the rich natural endowment in the country necessitated investment in human capital in order to efficiently harness the resources for economic development.

Investment in human capital has been shown to be positively related to economic growth and development of a nation (Gbosi, 1996: Yesufu, 2000; Guptal et al, 2001; Olaniyi & Adam 2002). It has been argued however that human capital development raise the income of the poor in a nation, thus raising the income spread between the poor and the rich which of course is a worldwide objective of macroeconomics. A simplified implication of this is that human capital development promote equity and reduces poverty besides aid in the efficient allocation and civilization of scale resources. It has also been argued that human capital development is closely tied to the issues of education and economic growth and development. Economic growth and development is largely a function of human capital, which is an embodiment of good health, education, knowledge, skills, attitudes, expertise and technological known-how (Nwankwo, 1981; Babalola 2003; Adeyemi & Akpotu 2004).

Human capital theorists are of the view that education as an investment in human capital pays off in the form of higher lifetime earnings of the individual as well as enhancing the efficient productive capacity of the nation’s economy

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