ANALYSIS OF GROWTH PATTERN IN NIGERIA ECONOMY



Azariadis and Drzen (1990) model the mechanism of human capital transmission across generation in the more plausible framework of an overlapping generations model (Lucas followed Ramsey in the simplifying assumption that households as well as firms are infinitely lived in these models agents inherit the human capital accumulated by the previous generation, they then decide how much time to devote to training a young graduate in acquiring further skills in technology that increases labour quality, thereby affecting their marginal productivity when older. Since a given generation deciding its own human capital investment does not take into account the inter temporal spill-over effect upon the human capital at the social
level. This state of affairs could be ascribed to the impossibility of concentrating with the future generations and sometimes is described as allocation inefficiency due to “incompleteness of markets”. The sources of this problem affecting human capital investment is therefore rather different from the set of condition previously seen to impair the allocative effectiveness of markets that do exist.

          Aemoglu (1998) had offered a formal demonstration of how positive spill-over effect (Pecuniary externalities) created by workers educational and training investment decision can give rise to macro-level increasing returns in human capital. His model supposes that workers and firm make their investment in human and physical  capital, respectively before being randomly matched with one another. The direct consequences of random matching is that the expected rate of return on human capital with which a worker will be provided, similarly, the return on physical capital is increasing in the average human capital that the firm expect the workers to bring to the job. Hence an increase in education for a group of workers induces the firm to invest more in tangible asset, thereby increasing the return to all worker in the economy. Through a similar argument the model is seen also to imply that there are “ social increasing returns” in physical capital.

          In the early 1990’s pioneering econometric studies (based on international panel data for a widely diverse array of countries during the post-1960 era) provided empirical support for the conclusion that human capital formation was among the factors that significantly affected the aggregate level of rate of economic growth.
          The found that success in the process  of hatching of internationally in terms of GDP growth was positively related to the overall social rate of human capital formation.
          Furthermore, the poor countries that were tending to catch up with the higher income economies were restricted to those that were maintaining levels of investment in formal education which were high in relation to their receptive GDP levels.
          More recent econometric studies have yielded three robust empirical findings.
          There is only weak empirical support of the hypothesis that changes in the human capital stock affect growth rate.
          There is strong spatial support for the hypothesis that the relative level of the stock of human capital (in relation to the labour force or aggregate out) has a positive effect on growth rates)
          The magnitude of the “level affect” of the human capital stock is itself far from uniform across the distribution of economies, the impact on growth rates does not vary linearly with the relative size of the stock but, instead becomes proportionately smaller among the economies where the average educational attainment is already high.
          The broad interpretation of these finding in the context of recent growth models is that raising the general level of educational attainment interacts positively with other forces. Among them the accumulation of complementary physical capital and the application of new technologies. Higher human capital intensity thus permits countries to accelerate their productivity growth rate and narrow the relative size of the per capital real income gaps separating them from the leading economies.
          Maintaining a high average level of education attainments and correspondingly high rate of investment in other forms of human capital (e.g. health, internal spatial and occupational mobility) would appear to serve as a stabilizing force although not a guarantee-against continuing secular decline in a country’s relative per capital income position. Most of theoretical literature on education growth focuses on the role that invest in formal education plays in modern economies
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