A Macro Econometric Model of Human Capital Development and Activity Sectors Performance in Nigeria

Abstract

Several studies on human capital development have ignored its effects on activity sectors of the economy in developing countries like Nigeria. This paper examined the effects of human capital development on the Nigerian real sector activity 1981 to 2022 with data from Central Bank of Nigeria’s Statistical Bulletin, and National Bureau of Statistics. This paper utilized a macro-econometric model approach anchored on the endogenous growth theory. Results show that a 1% increase in HCD significantly led to diverse effects on the activity sectors through public spending channel - agricultural output dropped (9.9%), industrial output improved (6.6%) and services sector increased (15%). This implies that human capital development is a significant determinant of agricultural output in Nigeria; however, human capital development does not have significant effect on industrial output, though its relationship with the sector is positive and human capital development is a significant determinant of output in the services sector. This paper recommended among others that the ministry of agriculture should incentivize through that availability of credit facilities and technological innovation so as to make agricultural activities attractive.

Keywords:Agriculture, industry, macro econometric modeling, human capital development, Nigeria

JEL codes: J43, O25, F14, J24

DOI: 10.7176/DCS/13-3-04

Publication date:March 31^st 2023