Human capital and economic growth nexus in Nigeria

Abstract

The importance of human capital to economic growth and development cannot be overstressed, particularly for the fact that human capital is central to the development process of any economy. Therefore, this study examines the impact of human capital development on economic growth in Nigeria from 1981 – 2018. The study used the Ordinary Least Square (OLS) technique, and it focuses on the impact of government expenditure on education, health, and economic growth and the direction of causality between the human capital variables and economic growth in Nigeria. The findings show that government expenditure on education statistically and significantly affects real GDP. However, government expenditure on health had a positive and insignificant impact on real GDP. It was also found that gross fixed capital formation and population growth positively and statistically significantly affects real GDP and foreign direct investment had a negative and insignificant impact on real GDP. Also, a significant unidirectional causality was found running from government expenditures on education and health to real GDP. The study recommends, therefore, that expenditure on education be sustained and increase healthcare expenditure. These recommendations, no doubt, would bring about qualitative human capital that would further enhance economic growth and development in Nigeria.