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.