health are basic objectives of development; they are important ends in
themselves. Health is central to well-being, and education is essential for a
satisfying and rewarding life; both are fundamental to the broader notion of
expanded human capabilities that lie at the heart of the meaning of development
(Todaro and Smith, 2011).
No country has
achieved sustained economic development without substantial investment in human
capital. The role and importance of human capital in propelling the pace of
economic growth cannot be overemphasized. The development of human capital has
been recognized by economists to be a key prerequisite for a country’s
socioeconomic and political transformation. Therefore, human capital is
considered as the most valuable asset and needs to be mobilized, developed and
empowered to participate fully in all socio-economic activities. To do this, it
is first of all required that the stock and mix of human capital in the country
be assessed based on the outcome of this assessment, plans are put in place to
develop the required manpower to fill the existing gaps while provisions are
made for future needs.
It was opined by
Adedeji and Bamidele (2003) that the generally agreed causal factors
responsible for the impressive performance of the economy of most of the developed
and the newly industrializing countries is an impressive commitment to human
capital formation. This has been largely achieved through education and
training by all the people of these countries. It is important to know that
human capital, which gained reasonable attention, started with seminar papers
two decades of the last century. It has refined to highlight its endogenous
contributions to the growth process (Romer, 1996, 1990; Lucas, 1998).
Therefore, all developing countries were advised to invest in human capital
formation of which Nigeria
also participated. Nigerian government did not only start training people in
schools, but formulated educational policies in relation to primary, secondary
and tertiary institutions towards making education workable in Nigeria. Nigeria has
come a long way in her development planning efforts. A major component of the
development planning process is the effect in human capacity building through
education and training.
classical nor neoclassical authors on economic growth gave much attention to
the role of human capital as one of the sources of growth. In contrasts, other
authors, for example, Mankiw et al (1992) postulated later that there is a
significant relationship between investment in human capital and economic
growth. In theory, since human capital is related to knowledge and
qualifications, and since economic growth depends on the progress of
technological and scientific knowledge, it is reasonable to expect that growth
is a function of human capital. The human capital development paradigm focuses
on the development of human capabilities such as enhanced knowledge and skills
as well as improved health. It is also concerned with how people acquire
knowledge and utilized it in the production process. The approach further
operates and ensures that the needs of people are not only the opportunities to
form capabilities, but also the opportunities to utilize them. This is due to
the realization that human potentials will be wasted where the efforts of human
development fails to balance the formation and use of human capabilities. In a
nutshell, the human development strategy entails that the fruits of economic
growth and development must be translated into improved and expanded choices in
the lives of people, increasing both their capabilities and opportunities
It has been
stressed that the differences in the level of socio economic development across
nations is attributed not so much to natural resources and endowments and the
stock of physical capital but to the quality and quantity of human resources.
According to Oladeji and Adebayo (1996), human capital resources are a critical
variable in an economy growth process and worthy of development. They are not
only means but, more importantly, the ends that must be saved to achieve
economic growth and progress. This is underscored by Harbinson (1973), who
posited that “human resources constitute the ultimate basis for the wealth of
nations. Capital and natural resources are passive factors of production human
being are the active agents who accumulate capital, exploit natural resources,
build social, economic and political organizations, and carry forward national
development. Clearly a country which is unable to develop the skills and knowledge
of its people and to utilize them effectively in the national economy will be
unable to develop anything else”.
been involved in planning to develop the country since her independence. But
the strategy has been emphasizing heavily on the accumulation of physical or
material capital to the detriment of human capital in the quest for rapid
socio-economic progress. However, previous development strategies which
virtually ignored the social or human aspect of development did little to
alleviate the pace of development in the country. However, since 1990 when the
United Nations Development (UNDP) started publishing the human development
report year after year, the human development pathway to development began to
gain grounds in many countries including Nigeria. The 1999 UNDP human
development report on Nigeria
highlighted the over arching problem of poverty in the country. The report
noted that no meaning policies or programme for the alleviation of poverty can
be successfully developed in the country outside the framework of a holistic
sustainable human development paradigm (UNDP, 1999). The federal government of
Nigeria, perhaps in response to the 1999 UNDP report on the country, seems to
have now embraced the philosophy of human development strategy as evidenced in
its declare guiding principles in the 1999-2003 economic policy document “the
economy exists for and belong to the people and at all times the general
well-being of all people shall be the over-riding objectives of the effort”.
In more recent
times, renewed attention was paid to the role of human capital formation in the
country’s development process and this has prompted the federal government to
declare in its 1999-2003 economic policy programme that “the economy exists for
and belongs to the people, and at all times the general objectives of the
government and the proper measure of performance” (FGN, 1999). This policy
statement of the government is furthered reiterated in the National Economic
Empowerment and Development Strategy (NEEDS). The provision of high quality
education and health care to all the country’s citizen is considered a key
element of public policy by all levels of government.
In the same
regard, the National Economic Empowerment and Development Strategy (NEEDS, 2004
- 2007) document stated that NEEDS is about the Nigerian people. Their welfare,
health, employment education, political power, physical security and
empowerment are of paramount importance in realizing their vision (Nigeria, 2004.
p11). Also, Nigeria
along with other 191 member countries of the United Nations Organizations (UNO)
subscribed to the attainment of the Millennium Development Goals (MDGs) by the
year 2015. These MDGs are salient to human capital development as they are
geared towards reducing poverty, ill-health and educational deprivation.
The 2010 Human
Development Index (HDI), values for Nigeria
was 0.423 placing her in the 142nd position among 169 countries with
comparative data, whereas Ghana
ranked 130 with HDI value of 0.467 while South Africa placed 110 with HDI,
value of 0.597. In three broad categories of; high, medium and low human
was grouped among the countries considered to have low human development (UNDP.
formation is a prerequisite for Nigeria
and Nigerians to become competitive in the 21st century globalized
economy which is knowledge based. A country’s competitiveness in the New
International Economic Order (NIEO) is strongly connected to human capital.
Hence human formation is undoutbly the pivot for any meaningful programme of
socio-economic development of Nigeria
and indeed of any country. Highly skilled and flexible human capital is
essential to compete effectively in today’s world and is a key building block
of a knowledge based economy. Such human capital encourages nations to adopt,
adapt, use and produce knowledge ad to become central to its development. All
levels of education have their role to play; primary education is the
foundation for life long learning (Cutz, 2006).
According to a
World Bank Report of 1996 titled, “Nigeria,
poverty in the midst of plenty” Nigeria
presents a paradox, the nation itself is rich but is inhabited by poor people.
Human condition in Nigeria
have greatly deteriorated, resulting to large scale poverty as population
growth has outripped the rate of food production. The existing social services,
the quality of nutrition, education and health services have deteriorated. The
challenge for Nigeria according to Umo, (1995) is not one of improving one
sector, but to adopt growth and social services oriented programme or policies
that will enable all its inhabitants to improve their welfare such policies
would switch public expenditure towards those that emphasize the development of
human capita, such policies could result in rapid development of social
indicators and under pin the formulation of necessary policies for rapid and
sustained growth. This implies the development of her human resources which
invariably is human capital development.
investment has been identified by scholars to entail the process of acquiring
and increasing the number of persons who have the skills, education and
experience which are critical for the economic and political development of a
There are five
ways of developing human resources (Shultz. 1991):?
Health facilities and services, broadly conceived to
include all expenditures that affect the life expectancy, strength and stamina.
On the job training, including old type of
apprenticeship organized by firms.
Formally organized education at the elementary,
secondary and the higher levels.
Study programme for adults that are not organized by
firms, including extension programme notably in agriculture
Migrating of individuals and families to adjust to
changing job opportunities.
In its widest
sense, investment in human capital means expenditure on healthcare, education
and social services in general. It is increasingly recognized that the growth
of tangible capital stock depends to a considerable extent on human capital for
a nation which is the “process of increasing knowledge, the skills and all
capacities of all the people of the country”.
Studies made by
Schultz, Harbison, Dension, Kendrich, Abramouth, Becdar, Bowman, Kuznets and a
host of other economists reveals that one of the important factors responsible
for the rapid growth of the American economy has been the relatively outlays in
education. They said that a dollar invested in education brings a greater
increase in national income than a dollar spent on dams, factors of production
or other tangible capital goods. In Gabraith’s words “we now get the larger
part of our growth not from more capital investment but from investment on men
and improvement brought about by improved men”. Earlier economists like Adam
Smith, Veblen, and Marshal stressed the importance of human capital in
production. Less developed countries (LDCs) are characterized by economic
backwardness which manifests itself in low labour efficiency, factor mobility,
limited specialization in occupation and in trade, a deficient supply of
entrepreneurship and customary values and tradition social institutions that
minimize the incentives for economic change. The slow growth in knowledge is an
especially severe restraint on programme. To remove economic backwardness and
instill the capacity and motivations progress, it is necessary to increase the
knowledge and skills of the people. In fact, without an improvement in the
quality of human factor no progress is possible in an under developed country.
human capital is also required to raise the general living standards of the
people in LDCs. This is possible when education and training make fuller and
rational utilization of surplus manpower by providing larger and better jobs
opportunities in both rural and urban areas. These in turn, raise incomes and
living standards of the people. Therefore, economists are of the view that it
is the lack of investment in human capital that has been responsible for the
slow growth of less developed countries (LDCs) such as Nigeria.
OF THE PROBLEM
been made of no significant economic growth by any country without adequate
development of her human capital. In the past, much of the planning in Nigeria was
catered on the accumulation of physical capital for rapid growth and
development without recognition of the important role played by human capital
in the development process. The Human Development Index provides a composite
measure of three dimensions of human development, namely health, education and
income; living a long and health life (measured by life expectancy), being
educated (measured by adult literacy and education of primary secondary and
tertiary levels) and having a decent standard of living (measured by purchasing
power parity and income). Data obtained are combined into an index, on a scale
of 0 – 1 with the following subdivisions; high human development (0.8-1.0),
medium human development (0.5-0.7) and low human development (0.0-0.49) (UNDP,
on the 2010 Global Competitiveness Index (GCI) was 3.38 which gave her a rank
of 127 out of the 139 countries surveyed. Furthermore, National Average per
capital income suing purchasing power parity (PPP) method, in Nigeria 2010 was
a mere US $900 compare to $2,190 in Ghana and $10,290 in South Africa with the
corresponding ranks of 139,157 and 74 for Nigeria, Ghana and South Africa
respectively. In 2010, life expectancy in Nigeria
was 48.4 years, below that of Ghana
of 57.1 years South Africa
at 52 years.
on social service such as education and health care that are critical to human
capital development is generally low in Nigeria. the country’s budgetary
allocation to education is still a far cry from the United Nation Education,
Scientific and Cultural Organization (UNESCO) recommendation of 26% of the
national budget which is to be spent on education by member countries. The
outcome of the low spending on education is the continued decline in
educational opportunities and standard in the country. The health sector in Nigeria is
likewise in a state of parlous decay. Budgetary allocation to health as a
proportion of the national budget fluctuated between 2.70% and 7.00% from 1999
to 2010 (Federal Ministry of Finance, 2010). The country’s health sector was
ranked 191 among 201 countries surveyed by the World Health Organization (WHO)
in 2010. However, it is obvious that only a healthy population can be fully
productive as health care is not only health producing by also wealth
producing. The foregoing is indicative that human capital in Nigeria is
severely under-developed. Based on these problems, this study seeks to examine
human capital as the key to Nigeria
economic growth and development.
In the light of
the problem therefore, this study seeks to proffer answers to the following
Does human capital development impact on economic
growth in Nigeria?
expenditure on education have significant effect on economic growth in Nigeria?
Does government expenditure on health have significant
effect on economic growth in Nigeria?
Does the level of school enrollment have significant
effect on economic growth in Nigeria?
Does the level of infant mortality rate have
significant effect on economic growth in Nigeria?
Does life expectancy have significant effect on
economic growth in Nigeria?
OF THE STUDY
objective of this study is to examine human capital as a key to Nigeria
economic growth and development. Other secondary objective of this study will
To examine the impact of human capital development on
economic growth in Nigeria.
To assess the impact of government expenditure on
education and economic growth in Nigeria.
To assess the impact of government expenditure on
health and economic growth in Nigeria.
To investigate the impact of infant mortality rate on
economic growth in Nigeria.
To examine the impact of life expectancy on economic
growth in Nigeria.
OF THE STUDY
hypothesis were put forth for this study:
Ho: Human capital formation has no impact
on economic growth in Nigeria
Ho: Government expenditure on education
does not have significant impact on economic growth in Nigeria
Ho: Government expenditure on health does
not have significant impact on economic growth in Nigeria
Ho: The level of school enrollment does not
have significant effect on economic growth in Nigeria.
1.5 SIGNIFICANCE OF THE STUDY
This study will reveal the level of human capital
investment in Nigeria,
both in terms of the government financial outlays on education and health, and
the actual resultant effect in terms of the actual school enrollment and the
level of infant mortality rate as proxies for education and health
respectively. It has been observed that investment in human capital contributes
in numerous ways to the development of a general milieu favourable to economic
progress. Apart from the extension of human capabilities. If there were
inefficient management or utilization of existing human resources, the quest to
achieve economic growth would be more and more elusive with lapse of each day
as they were. In recognition of the above, this study intends to carry out a
detailed study on the current state of the nation’s human resource development
and will also serve as a reference material for research purposes on human
capital investment and economic growth in Nigeria. as this study will be
useful to policy makers, economists, health and education experts, students and
1.6 SCOPE OF THE STUDY
This study will
make use of quarterly time series data for this period 1975-2013. As emphasis
will be centered on human capital investment in terms of government expenditure
on education and health, school enrollment.
OF THE STUDY
One of the
unending problems plaguing developing countries is the non-availability of
research data. Nigeria
is not an exception to this problem. Data limitation is as a result of
restricted access to data banks, fluctuating communication network which
particularly made this research study source data through secondary sources
whereas in uniqueness of research study, several research centers would be been
Time and cost is
also a constraining factor as this study was done alongside other academic
engagement. All these, thus pose as a limitation to the effective execution of
OF THE STUDY
The study has
been organized in five chapters, with chapter one dealing with the
introduction; and chapter two is an exercise in the review of relevant
literature. Chapter three and four deals with the model specification and
empirical analysis respectively. Finally, findings, recommendations and
conclusion are taken care of in chapter five.