Human Capital Development and Nigerian Economy in long-Term Perspective: Empirical Evidence

Abstract

Economic development is characterized by a reduction in poverty, a reasonable rate of employment, equality in distribution of national resources and wealth; which all culminate to enhanced standard of living in general. For the past four decades, the role of human capital in the achievement of economic development has been at the centre stage of discourse amongst development economists. In spite of both the theoretical foundations and empirical evidence for the contributions of human capital to the economy, the empirical linkage especially for Nigeria is yet to be settled and thus remain inconclusive. This has been partly linked to variations in the study periods, as well as the difference in methodologies adopted. This study therefore contributes to the literature by empirically investigating the long run relationship between human capital and economic development in Nigeria within the framework of autoregressive distributed lag model. Adopting the bounds testing approach of the autoregressive distributed lag (ARDL) technique, the relationship between GDP per capita and measures of human capital development such as gross enrolment ratios at the three levels of education subsisting in Nigeria are examined. Also due to the imperative of government policy through her investments in developing human capital as noted by the endogenous growth theorists, measures such as total government expenditure on education and health are relevant in Nigeria context and are therefore incorporated into the research. The results of the study reveal that most of the human capital variables adopted except government health expenditure are statistically insignificant in explaining economic development. Following from the findings, it is suggested that measures that will enhance quality human capital formation through skills acquisition in order to ensure labour productivity, job creation and sustainable economic development should be encouraged by the stakeholders. Furthermore, proper institutional framework which ensures effective, quality and efficient utilization of government resources allocated to both the education and health sectors should be pursued with vigour and put in place.