IMPACT OF HUMAN CAPITAL DEVELOPMENT ON ECONOMIC GROWTH IN NIGERIA

ABSTRACT

The study analysed the profile of economic growth in Nigeria with respect to human capital development. It determined the effect of education spending on economic growth in Nigeria; investigated the effect of health care spending on economic growth in Nigeria between 1980 and 2016. 

Secondary annual time series data on total government spending on education, total government spending on health and economic growth which covered the period of 1980 and 2016. Data were obtained from Central Bank of Nigeria (CBN) Statistical bulletin 2016 and World development indicators (WDI) for the analysis. Data were analysed using vector autoregressive regression analysis drawing on error correlation specifications and ADF test (Augmented Dickey fuller). Both short run and long run effect of real gross domestic product and government expenditures on education and health were estimated.   

Vector autoregressive model (Var) was used to analyse the annual time series data and it was deduced from the analysis that; government expenditure on education and health has a positive but significant effect on real gross domestic product (RGDP) in the short run. Statically the result shows that a unit increases in government spending lead to 75% increase in real gross domestic product in. This implies that in the short run increase in government spending lead to a steady but slow rate of increase in the real per capita income. Also, the result shows that life expectancy rate has a positive and significant relationship with real gross domestic product. Statically a unit change in life expectancy lead to 13.5% increase in real gross domestic product. Lag of life expectancy rate does not have effect on of gross domestic product both in long run and short run. The analysis show that of total government expenditure on health has a positive and significant impact on real gross domestic product in short run period. Statistically 1% increase in total expenditure of the government on health lead to 176% increase in real gross domestic product. It shows further that lag of total expenditure on health has a corresponding impact on lag of real gross domestic product both in short run and long run.

TABLE OF CONTENT

CHAPTER ONE: INTRODUCTION

Background to the study ………………………………………………….……….1

Statement of the problem…………………………………………………………..3

Objective of the study………………..…………………………………………….4

Justification of the study………………..………………………………………….4

Scope of the study………………………..………………………………………...5

plan of the study…………………………..………………………………………..5

CHAPTER TWO: LITERATURE REVIEW

2.1 Conceptual review……………………………………………………….…………7

2.1.1 Human capital ……………………………………………….……….......7

2.1.2 Economic Growth………………………………………….…....…….…7

2.2 Theoretical review………………………….……………………….…...………....8

2.2.1 Human Capital Development in Nigeria….……………….…...…....…...8

2.2.2 Challenges of Human Capital Development in Nigeria……….………...10

2.2.3 Review of Empirical Literature………………………………....………12

2.2.4 Limitations of Previous Study……………………………………...…...18

CHAPTER THREE: METHODOLOGY

3.1 Theoretical Framework …………………………………………………………..19

3.2 Model Specification……………………………………………………………....20

3.3 Apriori Expectation……………………………………………………………….20

3.4 Definition and measurement of variables………………………………………...22

3.5 Techniques of Analysis…………………………………………………………...22

3.5.1 Unit Root Test………………………………………………………......24

3.5.3 Co-integration………………….………………………………………..24

3.5.4 F-statistic……………………….…………………………………....…..24

3.5.5 Durbin-Watson test (DW)…….…………………………………………24

3.5.6 Heteroskedacity……………….…………………………………………24

3.5.7 Vector autoregressive test…….…………………………………………24

3.6 Sources of Data…………………………………………………………………....24

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CHAPTER FOUR: ANALYSIS AND PRESENTATION OF DATA

4.1 Analysis of Trends and Pattern of Economic Growth and Human CapitalDevelopment in Nigeria……………………………………………………………......25

4.2 Correlation matrix……………………………………………………………….....29

4.3 Unit root test………………………………………………………………………..30

4.4 Cointegration Test……………………………………………………………….....32

4.5 Vector Autoregressive Model (Var)………………………………………………..33

CHAPTER FIVE: SUMMARY OF FINDINGS, POLICY IMPLICATION AND RECOMMENDATIONS.

5.1 Summary of the Findings…………………………………………………………..38

5.2 Policy Implication of result………………………………………………………...39

5.3 Recommendations………………………………………………………………….40

5.4 Conclusion…………………………………………………………………………42

REFERENCE……………………………………………………………………….…45APENDIX……………………………………………………………………………...49