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ECONOMIC GROWTH AND HUMAN CAPITAL DEVELOPMENT: THE CASE OF NIGERIA
There can be no significant economic growth in any country without adequate human capital development. In the past decades, much of the planning in Nigeria was centered on the accumulation of physical capital for rapid growth and development, without due attention recognition of the important role played by human capital in the development process. The paper examines empirically the relationship between economic growth and human capital development using Nigerian data. The basic macroeconomic variables of concern derived from the literature review are: Growth rate of real gross domestic product (RGDPG), capital expenditure (CE) on education, recurrent expenditure (RE) on education, real gross capital formation (RGCF) was used to proxy physical capital formation, enrolments into primary (PRYE), post-primary (PPE) and tertiary (TERE) educational institutions were used to proxy human capital development. With the aid of Econometric Views (EViews, version 3.1), the model was estimated using annual data from 1970-2003. The application of the cointegration theory incorporating the error correction mechanism was explored.
It is found that investment in human capital, through the availability of infrastructural requirements in the education sector accelerates economic growth. The physical capital formation proxied by real gross capital formation is correctly signed and statistically significant at 1 per cent level of significance. It indicates that it has a significant impact on Nigeria’s economic growth. The paper recommends among others, that the Government should continue to encourage primary and postprimary enrolments as this would add up to improve the low adult literacy level which remains at 57.0 per cent. Also, teachers’ salaries and improved working conditions in educational institutions should be accorded high priority by the Government. Finally, the efforts of Government in increasing primary school enrolment through the free compulsory Universal Basic Education should be sustained and made free up to the end of the junior secondary school.
Keywords: Economic growth, Human capital development, Nigeria