Impact of education on economic growth of nigeria

ABSTRACT

Any nation that wants to be developed must first of all developed its human capital. Expenditure on education is regarded as investment in human capital because it helps in skill formation and thus raises the ability to work and produce more. Government education spending is of great importance to national development and plays a critical role in promoting growth and knowledge deepening. The paper analyzed the impact of education on economic growth of Nigeria using ordinary least squares (OLS) to determine the relationship between education as human capital and Real Gross Domestic Product (GDP). The study therefore found that there is statistically significant relationship between RGDP and all the variables used in the study. The variables used are Real Gross Domestic Product, Capital Expenditure on Community and Social Services, Recurrent Expenditure on Education, and Secondary School Enrolment from 1990 to 2015 which is latest data for Nigerian education sector by Central Bank of Nigeria. The study also employed Augmented Dickey Fuller (ADF) unit root test and Johansen co-integration test technique to estimate the model of the study. The study found that there exist a 98.56% relationship between Real GDP and the explanatory variables testing for the unit root test the data are stationary at second difference and the co-integration test showed that one variable is integrating. The study recommends that the Nigerian government need to set up appropriate policies that will modify the educational sector of the economy to improve its standard as well as making education affordable and accessible to all. Incentives that will improve teachers performances and availability of educational infrastructures is also to be examined so as to enable the country increase its human capital formation that could lead to possible growth and  development.