HUMAN CAPITAL DEVELOPMENT: IT’S IMPLICATION ON ECONOMIC GROWTH

ABSTRACT
This research study seeks to examine the implication of human capital development on Nigerian economic growth from 1983-2011. It tries to ascertain the level of government expenditure on education and health as a component of human capital development on economic growth. In the course of the research work employed, the use of multiple regression model based on ordinary least square (OLS) method was used in the regression. The result shows that their existed a positive relationship between the dependent variable (RGDP) and the explanatory variables (GEE) and (GEH). 

It is estimated from the result that #1 increase on Government expenditure on education and health, on the average, will lead to increase by #1.62k and 93kobo in RGDP respectively. In the light of the finding, it was recommended that the authorities need to improve funding on expenditure relating to education and health with a particular emphasis on infrastructure e.g. maintaining standard libraries and laboratories which are among the things that develop human resources in the country. Also, proper institutional framework should be put in place to look into the manpower needs of the various sectors and implement policies that will lead to the overall growth of the economy if Nigeria will realize its objective as one of the 20 leading economies by the year 202020.


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DEPARTMENT OF   ECONOMICS
FACULTY OF SOCIAL SCIENCE

TABLE OF CONTENTS
Title Page                                                                                            i
Approval Page                                                                                              ii
Dedication                                                                                                     iii
Acknowledgement                                                                                       iv
Table of Contents                                                                                         vii
Abstract                                                                                                         viii
CHAPTER ONE: Introduction                                                                  
1.1       Background of the study                                                                 1
1.2       Statement of the Problem                                                   4
1.3       Objective of the study                                                                     4
1.4       Hypothesis of the study                                                                  5
1.5       Significance of the study                                                                5
1.6       Scope of the study                                                                           6
1.7       Limitation of the study                                                                    6
CHAPTER TWO: Literature Review                                                                      
2.1 Theoretical Literature                                                              7
2.2 Empirical Literature                                                                              11
CHAPTER THREE: Research Methodology                                                                    
3.1       Model of Specification                                                                   16
3.2       Model Estimation                                                                             16
3.3       Model Evaluation                                                                            17
3.4       Source Data                                                                                       19

CHAPTER FOUR: Presentation and Analysis of Result 
4.1       Presentation of Result                                                                     20
4.2       Analysis of Results                                                                         26
4.3       Test of Hypothesis                                                                           22
4.4       Implication of Result                                                                       23
CHAPTER FIVE: Summary, Conclusion and Recommendations  
5.1       Summary of Finding                                                           24      
5.2       Conclusion                                                                                        25
5.3       Recommendation                                                                             25
Bibliography                                                                                     27
Appendix I                                                                                                   
Appendix II

CHAPTER ONE
INTRODUCTION
1.1       Background of the Study
Human capital connotes man in relationship to the world of work; that is work involving production of goods and provision of services of all kinds in the socio-political, cultural and economic development of nations. In a more specific sense human capital consist of inherited and acquired abilities of labour with education and training being the primary source. Human resources are recognized as an agent of national development in all the countries of the world. UNDP (2005), states that education has a wide range of benefits which instigates powerful changes in people’s attitude to work and society. It makes it easier for people to learn a new skill throughout their lives and hence facilitate their participations in modern economies and society. Education has positive impacts on the economy and so, investment in education and training is imperative if the aim is to propel the economy to higher level of productivity and income and accelerate the rate of economic growth in Nigeria.  Education   increases the number of knowledgeable workers by improving their skills and enabling them to new challenges. In addition, education enhances their occupational mobility, reduces the level of unemployment in the economy, and increases the earning capacity and productivity of the country’s workforce. Health comes next to education in the development of human resources.  According to Yesufu (2000), a good health policy is a means by which government can at once ensure that manpower is generated in the right mixes and distributed in accordance with national priorities and ensure the highest level of labour productivity.  
Todaro and Smooth (2003), Lawason,(2009), points out that education and health are two closely related human capital component that works together to make an individual more productive.  Providing education and health services to the people is one of the major ways of improving the quality of human resources as noted by ADB (2009),. However, Nigeria’s most important macroeconomic objective since independent remains how to achieve accelerated economic growth and reduce poverty. In other to achieve this laudable objective, certain variables which have the capacity to accelerate growth have to be identified. Of all the contributory variables or factors to economic growth and development, human capital stands out as a major catalyst. Phillip Emeagwali (2003), made a bold declaration that “knowledge is the engine that drives economic growth, and Africa cannot eliminate poverty without first increasing and nurturing its intellectual capital.’’ Schultz (1961).Denison (1962) and a host of other economists confirmed that the economy depended on education and health to foster economic growth and development.   The human capital development on economic growth emphasize the growth model of (Romer,1986, Lucas, 1988) An interesting idea of the work is that in a long run, output per unit of input  could increase even when inputs were exhaustively accounted for. To this end, effective investment in human capital is a key component of long run economic growth, high level of productivity and increased GDP. Harbison (1973), in his article ‘’human resources as the wealth of the nations’’ opined that Human capital depends on the quality and quantity of education and healthcare delivery of the economy, and it has the capacity to empower individual as an active agent who accumulate capital, exploit natural resources, build social, economic, and political organization and carry forward national development. He also  said that the differences in the  level of socio-economic development across nations is not attributed  so much to natural resources and endowments and the stock of physical capital, but to the quality and quantity of human resources available in the country. (UNDP) 1997 support this fact and argued that development should focus on investment in human capital as a key component of long run economic growth and increased GDP. According to African Development Bank report ADB (1988), human capital development is an essential means of sustained economic growth and an end to itself. Also, World Bank(1998), assessment of 192 countries indicate that human capital on the average account for 64% of the total wealth while physical and natural capital account for 16% and 29% respectively. One conclusion that can be drawn here is that development process have gone from the resource exploitative model to the knowledge based technology driven which implies that the efficiency with which the physical and natural resources of an economy is been organized in the transformation process is a function of the sophistication of its human resources as rightly noted by Usman (1986),. Modern economic trends placed high emphasis on the conscious and deliberate enhancement of human resources with a view to harnessing full employment, increase in production, reduction in poverty and achieve broad economic growth and development.    Jinghan,(2005). Aigbokhan et al (2007) described it as being concerned with the transformation of the total manpower to enhance socio-economic responsibility, social integration, improving personal competence and better opportunities .Human capital is something that must exist or happen for national development.
1.2       Statement of the Problem
Nigeria is characterized by economic backwardness due to high rate of illiteracy, low labour efficiency, factor immobility, limited specialization of occupation and in trade, a deficient supply of entrepreneurship,  traditional and social institution that minimize the incentives for economic change, low productivity and low rate of GDP. All this problems manifests itself due to lack of adequate investment in human capital development.
The question arises are:
Does human capital development has any significant impact on   economic growth in Nigeria.
1.3       Objective of the Study
The broad objective of this research is:
(a)       To examine if human capital development has any impact on Nigerian   economy growth.
(b)       To evaluate the relationship between education and primary health care as a component of human capital development in respect to economic growth Nigeria.  
1.4       Hypotheses of the Study.
Hi; the alternative hypotheses shows that human capital development has a significant impact on economic growth.

 1.5      Significance of the study
The study of this nature is prompted by the slow rate of Nigeria’s economic growth in nigeria despite the huge contribution of the government. Researches on this topic being carried out over the years have not really achieved its prior objective. The effect of human capital development on economic growth holds a lot of benefits to our overall economic progress. This research will be useful for policy makers for policy modifications. 

1.6 Scope of the study:
This research work covers data on Government expenditure on education, health and Gross domestic Product (GDP) for the period of 1983-2011.    
1.7       Limitation of the study
            The limitations of this study are difficulty in assessing materials and also the research work was carried out within a limited time frame.  
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