Natural Resources, Human Capital and Economic Development in Nigeria: Tracing the Linkages

Abstract

The proposition that natural resource abundance tends to slow down economic growth through its deleterious impact on human capital accumulation is studied in the Nigerian context. Three main channels of transmission from natural resource abundance to stunted economic growth are discussed. They include: (a) the voracity effect, (b) the Dutch disease and (c) the neglect or crowding out effect. Estimating a system of seemingly unrelated regressions (SUR), we find evidence that natural resource abundance through its adverse effects on institutional quality, crowds-out human capital and affects economic growth negatively. The policy implication of our result makes the case for increased funding and participation in education, since more and better education tends to shift comparative advantage away from natural resource production towards manufacturing and services provision which accelerates learning by doing and guarantees economic development that is sustainable.