Human Capital Investment and Economic Growth in Nigeria

Abstract

The role of human capital in the growth process of any nation is indispensable. It is a major tool for poverty reduction. No nation can really boast of sustainable growth without concerting efforts towards enhancing the key components of human capital; education and health.  Going by the level of importance of these tools, investment in education and health has been an emerging strategy in the world today particularly for those nations that seek to attain an enviable position. The main aim of this paper is to carry out an empirical investigation on the relationship between investment in education, health and economic growth in Nigeria, using time series data from 1982 to 2011. This paper employs trend analysis, the Johansen cointegration and ordinary least square technique. Empirical findings however indicate that there is a long-run relationship between government expenditure on education, health and economic growth. The variables: health and education expenditure, secondary and tertiary enrolment rate and gross fixed capital formation appear with the expected positive signs and are statistically significant (except government expenditure on education and primary enrolment rate). The findings of this work have strong implications on education and health policies and considering the fact that they are at this time of great debate in the country. Therefore, this study recommends that in order to accelerate growth and liberate Nigerians from the vicious cycle of poverty, the government should put in place policies geared towards massive investment in the education and health sector in terms of infrastructure and manpower.

Keywords: Economic growth, Human Capital, Education, Health and Gross fixed capital formation.

Human Capital Investment and Economic Growth in Nigeria