CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Human capital development refers to the knowledge, skill sets, and experience that workers

have in an economy. The skills provide economic value since a knowledgeable workforce can

lead to increased productivity. The concept of human capital is the realization that not

everyone has the same skill sets or knowledge. Also, the quality of work can be improved by

investing in people's education. However, Economic growth is an increase in an economy's

ability, compared to past periods, to produce goods and services. Economic growth is

measured by the change in the gross domestic product (GDP) of a country. GDP is a

representation of the total output of goods and services for an economy. For example, if a

country has a GDP rate of 2.5% for the year, it means the economic growth of the country

rose by 2.5% from a year earlier. In order to determine how human capital impacts growth,

we must first look at two key drivers of economic growth in an economy.

The concept of human capital is a relatively recent idea in the realm of economic theory.

While economists have long paid close attention to the concept of investments in physical

capital in recent years they have placed emphasis on the concept of human capital

investments. Largely, this shift occurred as a result of the failure of classical economist’s

theory to explain the dominance of developed countries over undeveloped ones in the

international market. Human capital covers a broad range of concepts but the most essential

feature is increased productivity through investing in employees, it can mean education

acquired from elementary school level, training of basic reading and writing skills, to job

training, both of general and specific skills.

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The use of the term human capital in the modern neoclassical economic literature dates back

to Jacob Mincer pioneering article “Investment in Human Capital and Personal income

distribution” in the Journal of Political Economy in 1958. And the best known application of

the idea of ‘Human Capital’ in economics revolves around the work of Mincer, Schultz and

Gary Becker of the Chicago school. Becker’s book entitled Human Capital published in 1964

became a standard reference for many years. According to Gary Becker; Human Capital is

similar to “physical means of p re reroduction” (example factories and machineries) one can

invest in human capital (via education, training and medical treatment) and one’s income

depends partly on the rate of return on the human capital one owns, which allows one to

receive a flow of income which is like interest earned. Human capital is substitutable though

it will not replace land, labor or capital it can be substituted for them to various degrees and

be included as a separate variable in a production function.

Human capital can also be defined as a way of defining and categorizing people’s skills and

abilities as used in employment and otherwise contribute to the economy. It is also used to

refer to the skills and knowledge intensity of the labor force in an economy which are

essentially acquired through schooling and training.

Human capital is a key factor of production which increases the employability in the job

market (Son, 2018) as it is the reflection of cognitive ability of individuals that helps them

understand and implement technologies in job activities (Hanushek & Kimko, 2015) and

results in greater competitiveness and performance of employees and employers (Agarwala,

2003: Marimuthu, Arokiasamy, & Ismail, 2009. It may be taken as the knowledge, skills, and

other attributes of individuals that enhance their productivity and earnings (Organization for

Economic Cooperation and Development 1998; Schuller, 2015; Son, 2018) that ultimately

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causes growth of productivity and wealth of the society (Schuller, 2015; Son, 2018) in terms

of GDP (Son, 2018).

Human capital is a key factor of production which increases the employability in the job

market (Son, 2018) as it is the reflection of cognitive ability of individuals that helps them

understand and implement technologies in job activities (Hanushek & Kimko, 2000) and

results in greater competitiveness and performance of employees and employers (Agarwala,

2003: Marimuthu, Arokiasamy, & Ismail, 2009. It may be taken as the knowledge, skills, and

other attributes of individuals that enhance their productivity and earnings (Organization for

Economic Cooperation and Development 1998; Schuller, 2000; Son, 2010) that ultimately

causes growth of productivity and wealth of the society (Schuller, 2015; Son, 2018) in terms

of GDP (Son, 2018). This potential for growth and survival (Manolova et al., 2002) could be

generated through education.

Nakamura (1981) also defines human capital broadly as labor skills, managerial skills and

entrepreneurial and innovative abilities plus such physical attributes as health and strength.

According to Robert Longley (2019), Human capital is the sum of knowledge, skills,

experience and social qualities that contribute to a person’s ability to perform work in a

manner that produces economic value.

Human capital refers to a conscious and continuous process of acquiring requisite knowledge,

education, skills and experiences that are crucial for the rapid economic growth of a country

(Harbison 2017, Salleh 2016). It involves investment in education, training and other social

services like transport facilities and housing. Underdeveloped countries are faced with two

diverse manpower problem; they lack the critical skills needed for the industrial sector and

have a surplus labor force. The existence of surplus labor is to a considerable extent due to

the shortage of critical skills and these problems are interrelated.

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The need for investment in human capital formation in such economies is more obvious from

the fact that despite the massive imports of physical capital they have not been able to

accelerate their growth rate because of the existence of undeveloped human resources

although growth of course is possible from the increase in the conventional capital even

though the available labor force is lacking in skills and knowledge growth rate will be

seriously limited without the latter. Human capital is then needed to staff and expand

government services to introduce new system of land use and new methods of agriculture, it

develops new means of communication to carry forward industrialization and to build the

educational system.

People are the most important asset a nation can have and there can not be any form of

economic development if the people don’t develop themselves.

When we talk about human capital the capital being referred is the one embodied in human

beings that yield income and other useful outputs over long period of time it could be

schooling, a computer training course, expenditure of medical care and lectures on the virtues

of punctuality and honesty are also capital. This is because it raises earnings, improve health,

or add to a person’s good habit over much of his lifetime.

The expenditures on education, medical care and so on are called investments in human

capital; they are called human capital because people cannot be separated from their

knowledge, skills health or values in the way that they can be separated from their financial

and physical effect (Gary Becker 1964).

We can therefore say that it is those innate abilities and various skills acquired by a person

that makes up his capital. Due to this factor there can be no significant economic growth in

any economy without adequate human and natural resources. The stock of human capital like

the stock of natural and physical capital will deteriorate and decay if not increased and
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maintained through improvements in public health and sanitation, social welfare services,

good nutrition and guaranteed employment schemes. The human capital formation indices

should be integrated into the planning process in order to achieve a sustainable growth and

development.

The human dimension is the sine qua non of economic recovery. No SAP or economic

recovery programme should be formulated or can be formulated or can be implemented

without having at its heart detailed social and human priorities. There can be no real

structural adjustment or economic recovery in the absence of the human imperative (Adedeji

et al., 2019).

Yesufu (2017) as cited in ‘Impact of Human Capital on Economic Growth in Nigeria: An

error correction approach opines that “The essence of human resources development becomes

one of ensuring that the work force is continuously adapted for and upgraded to meet the new

challenges of its total environment”.

This is because the economy is a dynamic entity, which is constantly changing in response to

various stimuli such as introduction and discovery of new techniques of production.

The totality of the effort and cost involved in this massive upgrading of the productive

capacity of the people constitutes investments in human resources, which is also referred to

as manpower development or human resources development. Human capital can be acquired

and developed in different ways namely; education, training, health promotion, as well

investment in all social services that influences mans productive capacities including,

telecommunications transport and housing. In the words of Ogwo and Agu (2016) as cited in

‘the impact of human capital on economic growth in Nigeria: an error correction approach

“education and training are generally indicated as the most important direct means of

upgrading the human intellect and skills for productive employment”.

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However human capital formation transcends mere acquisition of intellectual ability through

formal education system to include the family, the educational system ,formal or informal

institutions, special professional and training organizations; enterprise in- house

arrangements, and even individual self efforts.

For a nation to be termed or described as developed it must have the following characteristics

and according to Todaro and Smith (2015), these are;

1. To raise levels of living including, in addition to higher incomes, the provision of more

jobs, better education and greater attention to cultural and human values all of which will

serve as not only to enhance material well being but also to generate greater individual

and natural self esteem.

2. To increase the availability and widen the distribution of basic life sustaining goals such

as food, shelter, health and protection.

3. To expand the range of economic and societal choices available to individuals and nations

by freeing them from servitude and dependence not only in relation to other people and

nation states but also to the forces of ignorance and human misery.

If these three objectives are anything to go by then we can rightly say that Nigeria is still

underdeveloped and exhibiting the characteristics of a low -income developing country this

includes low levels of living, low per-capita national income, income inequality, poverty etc.

Nigeria can be categorized as a country that is primarily rural, depends on primary product,

exports, has high population growth, suffers from widespread poverty and rising

unemployment and must deal with tribal and ethnic conflicts. Since the advent of Nigeria’s

independence in 1960 it has experienced ethnic, regional and religious tensions, magnified by

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the significant disparities in economic and educational development between the south and

the north.

Nigeria’s social indicators placed it among the poorest in South Saharan Africa with a human

development index of 0.401 was ranked 137 th among 174 developing countries considered in

1993 (Odusola 1998). Infant mortality rate was about 144 per 1000 live births in 1981

(Odusola 1998).

The performance of the economy has not been satisfactory, from 1980s using conventional

indices. The periods 1960-65, 1970-75, 1976-80, 1981-85 and 1986-92 are very significant

and they represent important episodes in the economy. The 1960-65 period attempts to

capture both the independence and the commodity export boom at that time. The period

1970-75 reflects the era of oil windfall while 1976-80 period incorporates part of the oil

boom and austerity measures and various stabilization packages finally, the period represents

the structural adjustment years.

The oil boom and the consequent neglect of agriculture in the 1970s and early 1980s caused a

massive movement of people from rural to urban centers. Moreover regional and income

disparities are among the worst in the world (Todaro and Smith 2015).

For Nigeria to turn the tides of its economic misfortune and mismanagement, which includes

a high rate of unemployment, poverty, illiteracy and so on, it will have to take steps to raise

domestic food production and labor productivity; use oil revenues more rationally to diversify

economic activity and reduce the burden of its’ foreign debt; lower population growth

through a combination of effective family planning programme

Improved rural health and education and a reduction in absolute poverty: seek increased

foreign aid and investment, including significant debt relief (which was achieved recently):

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make greater use of market price incentives to allocate resources while endeavoring to

improve public and private decision making and maintain political stability between rural

ethnic and religious groups (Todaro and Smith2015).

All these can rightly be achieved through human means and therefore the role of human

capital to economic growth cannot be overemphasized and the development of human capital

has bee recognized to be an important prerequisite and an invaluable asset for a country’s

socio-economic and political transformation. Over the years, with the large population,

Nigeria has not been able to do much in terms of economic development and poor leadership

was blamed for the nation’s underdevelopment. This brings about the question; does the large

human resource available not able to affect economic growth? The answer to this question is

clear in the sense that most countries which are less populated then Nigeria has done

relatively well in economic good. Taking the case of Japan for example, it was a highly

populated country that was able to harness its large human resource and transform the

country into a developed one. In the view of the fact that populated countries can still achieve

economic growth, this study is embarked upon to assess the impact of human capital on

economic growth in Nigeria.

1.2 Statement of the Problem

“There can be no significant economic growth in any country without adequate human capital

development. In the past, much of the planning in Nigeria was centered 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”. This view was expressed by M.L.

Jinghan (2003) as cited by Ogujiuba and Adeniji in their paper, economic growth and human

capital development: the case of the Nigerian economy. They are of the view that people are

a country’s most valuable assets. Going by this view, investment in human capital in terms of

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education, on the job training and health will surely raise productivity in Nigeria. Much is

still to be desired in educational and health sector of the economy as we have seen that

investment in human capital was the triggering factor that led to the economic growth in

other developed countries. In the light of this, the following questions and more will need to

be answered in order for human capital to take its place in the growth process and planning

horizon of Nigeria these questions include:

1. How strong and significant will an increase in investment in education have on the

economy.

2. Does education and health have any link in the increase of productivity?

1.3 Objectives of the Study

This study is aimed at examining empirically the effect of human capital development on

economic growth and the objectives of the study include;

1. To ascertain the impact of human capital development on economic growth in Nigeria.

2. To determine the relationship between investment and economic growth in Nigeria

3. To examine the effect of foreign direct investment (FDI) on economic growth in Nigeria.

1.4 Hypotheses of the Study

The hypotheses of this research work are stated as follows:

1. H0: Human capital does not have significant impact on economic growth.

2. H0: There is no relationship between investment and economic growth.

3. H0: Foreign direct investment (FDI) has no effect on economic growth.

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1.6 Significance of the Study

Significantly, this research work is essential and relevant in many ways, especially in

revealing the contribution of human capital development on economic growth. This work is

also relevant in that it will aid the Nigerian administrative body on the need to vote more

resources on programs that promote Human capital development. . Also, this work will as

well serve as related literature for further research work especially on the impact of human

capital development on economic growth. However, with this work, government will see the

need to come up with effective approach in tackling over population and promoting capital

stock base of the economy. The significance of this research work cannot be over emphasized

in that if it's recommendations are implemented, will create more opportunities for increased

economic growth, more revenue for the government, employment opportunities and overall

wellbeing of the Nigerian economy.

1.7 Methods of Data Analysis

This research work shall adopt econometrics methodology in the analysis of data. The data to

be analyzed for the purpose of this study will sourced from secondary data source. The data

source coul be: Central Bank of Nigeria (CBN) statistical bulletin, National Bureau of

statistics (NBS), Global development statistics and international development statistics. The

analysis will investigate the impact, effect and short and long run relationship between the

depende and the independent variables in the model between 1990 to 2020.

1.8 Scope and Limitation of the Study

The scope of this study covers the Nigerian economy. This implies that the total effect of

human capital development in Nigeria will be critically examined in relation to other key

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selected independent Variables on economic growth. Specific years of study are from 1990 to

2020.

The limitations of this research work are as follows:

Doubtful reliability of secondary data, time constraint, lack of funds or low resources, paucity

of data, insufficient related materials in this field of study.

Despite the limitations listed above, the reliability of this work cannot be over emphasized as

the researcher with the help of his able supervisor will ensure hard work in realizing good

result.

1.9 Organization of the Study

This work is organized as follows: Title page, Declaration, Certification, Dedication,

Acknowledgement, table of content, Abstract, Chapters one to five, references and

Appendices.

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 CHAPTER TWO

REVIEW OF LITERATURE

2.1 Introduction

The main aim of this chapter is to review available available relevant literature of the subject

matter of the impact of human capital development on economic growth.

2.2 Conceptual Review

The purpose of this study is to develop a model to show the relationship between human

capital and economic growth. As argued in the earlier discussions, the general human capital

investment includes training, education, knowledge and skills that will enhance human

capital effectiveness. Based on the literature reviews, it is therefore postulated that human

capital leads to greater economic development. Economic development can be viewed in two

different perspectives; financial growth and non-financial performance. Financial

Performance includes productivity, market share and profitability, whereas, non-financial

performance includes customer satisfaction, innovation, workflow improvement and skills

development.

2.3 Theoretical Literature Review

Human capital development refers to the process of acquiring and increasing the number of

skilled persons who have the education and experience which are critical for the economic

growth of the country (Harbison, 2016). Human capital in Nigeria is produced mainly in the

schooling sector and health service sector. The government uses public resources for

education in the schooling sectorsuch as expendituresfor books, teaching material and other

inputs in the process of human capital formation. Thus, the input in the schooling sector is

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composed of time spent for education by the individual and of schooling expenditures by the

government. The economy is populated by an innate sequence of non-overlapping

generations of individuals. Thus, the types of human capital at disposal differ in the manner

in which they are built up, and in the returns received from them by individuals. The main

inputs in building up human capital are individual ability and time spent for education. From

the individual point of view, the time available is limited by the expected lifetime duration,

which is therefore considered as given by the individual. Also, greater provision of

schoolingsociety increases national productivity and economic growth. Human capital is a

term economists often use for education, health and other human capabilities that can raise

productivity when increased (Todaro & Smith, 2015). The concept of human capital refers to

the abilities and skills of human resources of a country, while human capital formation

(development) refers to the process of acquiring and increasing the number of persons who

have the skills, education and experience that are critical for economic for economic growth

and development of a country (Okojie, 20175).

According to Becker (2019), human capital is directly useful in the production process. It

increases a worker's productivity in all tasks, though possibly differentially in different tasks,

organizations, and situations. According to Acemoglu (2013), Gardener viewed human

capital as seen as a unidimensional, since there are many dimensions or types of skills. A

simple version of this approach would emphasize mental and physical abilities as different

skills while Schultz (2014) and Nelson and Phelps (20166) assumes that human capital stock

determines the ability to assimilate the technologies and that human capital affects the speed

of technological catch-up and diffusion of knowledge. Bowles and Gintis (2013) sees human

capital as the capacity to work in organizations, obey orders, and generally adapt to life in a

hierarchical/capitalist society. According to him, the main role of schools is to instill in

individuals, the correct ideology and approach towards life. This explains the relevance of

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investing in education for human capital development. More so, Spence argued that

observable measures of human capital are more a signal of ability than characteristics

independently useful in the production process. It can be deduced from above that human

capital will be valued in the market because it increasesfirms' profits.

The sources of human capital differentials are; innate ability, schooling, school quality and

non-schooling investments, training and pre-labor market influences. This study is focused on

the investment in human capital through training and non-school investment such as health

expenditure by the government. The emergence of human capital development started during

the Eric Ashby commission (1959) in Nigeria. It largely formed the bedrock of higher

education development in Nigeria. The commission wasset up in April 1959, with the

mandate to conduct an investigation into Nigeria's needs in the field of higher education or

post school certificate and higher education over the next twenty years. This was largely

informed by the manpower needed atindependence to replace expatriate officials and the

report was submitted in September 1960, a month before independence.

However, according to Guru (2016), economic growth can be defined in two ways. In one

way, economic growth is defined as sustained annual increases in an economy's real national

income over a long period of time. In other words, economic growth meansrising trend of net

national product at constant prices. This definition has been criticized by some economists as

inadequate and unsatisfactory. They argue that total national income may be increasing and

yet the standard of living of the people may be falling. This can happen when the population

is increasing at a faster rate than total national income. Hence, the second and better way of

defining economic growth is to do so in terms of per capita income. According to the second

view of Guru (2016) economic growth means the annual increase in real per capita income of

a country over the long period. To Amadeo (2016), economic growth is how much more the

14
economy produces than it did before and that if the economy is producing more, it makes

businesses to strive better. That give companies capital to invest and hire more employees.

According to Daly, Czech, Blackwelder, Magnus-Johnston, and Zencey (2010), the term

economic growth has two distinct meanings. Sometimes it refers to the growth of that thing

we call the economy (the physical subsystem of our world made up of the stocks of

population and wealth; and the flows of production and consumption). But the term has a

second very different meaning-if the growth of some thing or some activity causes benefits to

increase faster than costs– that isto say, growth that is economic in the sense that it yields a

net benefit or a profit. To Kessier (2012), economic growth occurs when a society becomes

more productive and is able to produce more goods and services.

Economic growth can therefore be seen asthe annual increase or improvement in the real per

capita income (real GDP per capita or output per person) of a country over a long period of

time. This is measured using annual real GDP which is the monetary value of all final goods

and services at market prices with year 2010 asthe base year. Some of the determinants of

economic growth are: investment, human capital, innovation and R&D activities, trade

openness, Foreign Direct Investment (FDI), institutional framework, political factors and

social-culturalfactors. It has been posited by many (Lucas 1998; Harbison and Myers 1964)

that human capital formation has contributed immensely to economic growth. This has been

achieved through increased knowledge, skills and capabilities acquired through education and

training by all the people in the country. Schultz (1961) has identified five ways of

developing human resources. Namely;

1. Investment in health facilities and services, broadly conceived to include all expenditures

that affect life expectancy, strength and stamina, and the vigour and vitality of the people.

2. On-the-Job training including old-type-apprenticeships organized by firms.

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3. Formally organized education at the elementary, secondary and higher levels.

4. Study program for adults that are not organized by firms including extension programs

notably in agriculture.

5. Migration of individuals and families to adjust to changing job opportunities.

Human capital investment is an important factor in modern economic growth and it has direct

effect on economic growth through a number of different channels, the most important of

which are increases in productivity and the increased rate of technological progress and

diffusion. Investment in human capital is also required to raise the general living standards of

people and this is possible when education and training makes fuller and rational utilization

of surplus manpower by providing larger and better job opportunities in both rural and urban

areas. The two human capital proxy; education and health are treated together because of

their close relationships. Health is central to well-being and education is essential for a

satisfying and rewarding life. A greater health capital may improve the return to investments

in education in part because health is an important factor in school attendance and in the

formal learning process of a child. A longer life raises the returns to investment in education

and on the other hand; greater education capital may improve the returns to investments in

health because many health programs rely on basic skills often learned at school. Education is

also needed for the formation and training of health personnel. Education is a sound

economic investment for individuals and families because it raises the quality of life,

improves health, productivity and living standards, increases individuals access to paid

employment and emancipate them for social and political participation in the economy (Bello

and King 1991, Hill and King 1991, Thomas 1991). When a sound macroeconomic policy is

put in place investments in education raises per capita GNP and reduces poverty because

better educated parents are more likely to ensure the education of their children and also

16
attend to the health requirements of their wards. Okogie (1995) succinctly puts it “attention to

health and leisure has resulted in tremendous savings due to reduced illness, longer life

expectancy and increased vitality”.

The Nigerian government which is the main employer of labor should play a leading role in

human capital investment activities as investments in education and health per person per

year was estimated to be about $63 compared to other developed countries like the republic

of Korea which invested as high as $160 per person per year, Malaysia invested $150 at the

same period. Clearly Korea and Malaysia witnessed rapid growth because of the huge human

capital investment in human resources. But in Nigeria government expenditure on real health

and education declined by about 51perent and 70 percent between 1980-1983 and 1987-1989

(Husain and Farugee 1994).Inadequate funding of education coupled with poor facilities in

school and deficiency in science facilities resulting in improper manpower mix has led to

what Yesufu (2000) As cited in ‘Impact of Human Capital on Economic in Nigeria. An error

correction approach terms institutional indigestion.

For effective and speedy development of human resources in Nigeria, the government and

beneficiaries (students and parents), employers and other stakeholders in the society should

share the responsibility of financing education and training. The government should

concentrate and intensify efforts in the funding of primary and secondary education as these

levels provides a solid foundation for human capital formation in any country since basic

literacy and upward movements in education and training hierarchy depends on these levels.

It has been universally acclaimed that investments in human capital through education has

substantially increased productivity and economic development (World Bank 1990; Okogie

2015; Odusola 2018) and the East Asian miracle is an attestation to this fact. In that economy

17
rapid growth was facilitated by the availability of highly skilled domestic engineers and

workers who could have productive use of foreign knowledge and imported capital.

In a study on, productivity growth in Japan Hamada and Honda (2005) found that rapid

growth resulted from huge investment in human capital through on- the-job training from

where workers acquired specific skills that enabled them adapt more easily and quickly to

imported technology. In a study of the determinants of real GDP, Psacharopoulous (2010)

examined 58 countries during 1960-1985. He found that education which is investment in

human capital is highly significant and positively related to aggregate output. In another cross

country analysis of the effect of human capital formation or per capita income, Mankiw,

Romer and Neil (2014) using an augmented model with human capital explaining nearly 80

percent of the variations in per capita income which is about 30 percent larger than when

human capital is excluded. The implication is that investment in human capital substantially

influenced per capita income which is about 30 percent larger than when human capital is

excluded. The implication is that investment in human capital substantially influenced per

capita income at 1 percent level of significance. Mbanefoh (1980), undertook a cost benefit

analysis of university education in Nigeria and found that university education boosts

productivity and hence growth when the discount rate is between one and ten.

According to Guisan Y. Frais (2016), and from the seminal research on human capital, to the

more up to date theories of endogenous growth; education has been considered as an

additional input in the production function with a positive effect over the GDP growth and

studies have also shown that poor health conditions in developing countries also harm the

productivity of adults. Statistical methods have shown that a large part of the effect on health

on raising earnings is due to productivity differences it is not just the reverse causality that

higher wages are used in part to purchase better health (Todaro and Smith 2015).

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In developing countries including Nigeria, there is greater inequality in educational

opportunities among other areas, and this is due to cultural tradition of such societies.

Investment in female education is therefore considered a waste in patriarchal societies either

because of poverty, tradition or parental bias (Schultz 1994, Okogie 205). Therefore rescuing

gender inequality through greater access to education and the labour market will help to

reduce poverty in Nigeria, thereby increasing the rate of economic growth. There is need to

increase investment in the human capital of women along side that of men to ensure rapid and

even growth.

2.4 Empirical Literature Review

Adeyemi and Ogunsola (2016) examined the impact of human capital development on

economic growth in Nigeria using time series data spanning from 1980 to 2013. The study

employed ARDL Co-integration analysis to estimate the relationship among the variables

used in the study. The study found a long-run co-integration among the variables. The

findings from the study also revealed that there is positive long-run relationship among

secondary school enrolment, public expenditure on education, life expectancy rate, gross

capital formation and economic growth but it was statistically insignificant. The results also

showed negative long-run relationship among primary, tertiary school enrolment, public

expenditure on health and economic growth. The study therefore recommended that

government should put in place the required education and training policy that would

guarantee quality schooling for primary and tertiary education and should also commit more

fundsto health sectorto enhance human capital development.Jaiyeoba (2015) examined the

relationship between human capital investment and economic growth in Nigeria using time

series data from 1982 to 2011. The study used trend analysis, Johansen cointegration and

ordinary least square technique. Empirical findings however indicate that there is a long-run

19
relationship between government expenditure on education, health and economic growth. The

variables: health and education expenditure, secondary and tertiary enrolment rate and gross

fixed capital formation appear with the expected positive signs and are statistically significant

(except government expenditure on education and primary enrolment rate). The findings of

this work have strong implications on education and health policies and considering that they

are of great debate in the country. Therefore, this study recommends that in order to

accelerate growth and liberate Nigerians from the vicious cycle of poverty, the government

should put in place policies geared towards massive investment in the education and health.

Eigbiremolen and Anaduaka (2014) employed the augmented Solow humancapital-growth

model to investigate the impact of human capital development on national output in Nigeria

using quarterly time series data from 1999 to 2012. The study used Johansen cointegration

test. The results showed that human capital development, in line with theory, exhibits

significant positive impact on output level. The study further revealed a relatively

inelasticrelationship between human capital development and output level. The study

recommended that government and policy makersshould make concerted and sincere efforts

in building and developing human capacity through adequate Educational funding across all

levels.

Oluwatoyin (2013) examined human capital investment and economic growth in Nigeria. The

study used Augmented Dickey Fuller (ADF) tests and found out that a positive relationship

exists between government expenditure on education and economic growth while a negative

relationship exists between government expenditure on health and economic growth. The

study therefore recommended that the government should increase not just the amount of

expenditure made on the education and health sectors, but also the percentage of its total

expenditure accorded to these sectors should be adopted.

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Mba, Mba, Ogbuabor and Ikpegbu (2013) evaluated the relevance of human capital

development on the growth of Nigerian economy. The study used Ordinary Least Square

(OLS) technique. The study also used GDP as a proxy for economic growth; Per Capital Real

Gross Domestic Product, primary school enrolment, public expenditure on education and

health, life expectancy, stock of physical capital as proxy for human capital. It was found

from study that there is a strong positive relationship between human capital development

and economic growth. The study therefore recommended revisiting the man-power needs of

the various sectors of the economy while workable policies should be put in place to bring

about an overall economic growth, expenditures on health and public education should be

utilized effectively and efficiently so that the country would experience quality health care

services and quality educationalsystem.

Isola and Alani (2020) evaluated the contribution of different measures of human capital

development to economic growth in Nigeria. It used data from Nigeria and adopted the

growth account model which specifies the growth of GDP as a function of labour and capital.

The model also included a measure of policy reforms. Based on the estimated regression and

a descriptive statistical analysis of trends of government commitment to human capital

development, it wasfound that though little commitment had been accorded health compare

to education, empirical analysis showed that both education and health components of human

capital development are crucial to economic growth in Nigeria.Amassoma and Nwosa (2011)

studies the causal nexus between human capital Investment and economic growth in Nigeria

for sustainable development in Africa at large between 1970 and 2009 using a Vector Error

Correction (VEC) and Pairwise granger causality methodologies. The result from the study

shows no causality between human capital development and economic growth. The study

recommended the need to increase budgetary allocation to the education and health sector

and the establishment of sound and wellfunctioning vocational institute needed to bring about

21
the needed growth in human capital that can stimulate economic growth. Also, the study

identified that labour mismatch is an issue that government needsto reckon with in order to

accelerate and sustain economic growth. Johnson (2011) examined human capital

development and economic growth in Nigeria and asserted that human capital is an important

factor used in converting all resources to mankind's use and benefit. The study used

conceptual analytical framework that employs the theoretical and Ordinary Least Square

(OLS) to analyze the relationship using the GDP as proxy for economic growth; total

government expenditure on education and health, and the enrolment pattern of tertiary,

secondary and primary schools as proxy for human capital. The found that there is strong

positive relationship between human capital development and economic growth and therefore

recommended that stakeholders need to evolve a more pragmatic means of developing the

human capabilities, since it is seen as an important tool for economic growth in Nigeria and

proper institutional framework should be put in place to look into the manpower needs of the

varioussectors and implement policies that will lead to the overall growth ofthe economy.

Following from the above empirical works reviewed, it can be deduced that some of the

methodological approaches employed in the works were grossly inadequate in addressing the

issuesrelating to the relationship between human capital development and economic growth

in Nigeria. That is, the use of Ordinary Least Square technique or Auto-Regressive

Distributed Lag (ARDL) approach where public expenditure on education and health is not

truly exogenous in economic growth model and/or the use of Johansen cointegration test

jointly ordinary least square technique were gross misapplication of the appropriate

technique(s). This is because, estimating the system of equation by applying ordinary least

squares often leads tosimultaneous equation bias. Hence, the need to provide an appropriate

technique to examine the relationship between human capital development and economic

growth in Nigeria is an empirical verification exercise whose need cannot be disputed.

22
Temple (2018)) noted that “the empirical evidence that education matters for growth is

surprisingly mixed”.

Pritchett (1999) shows that variation in the changes in average schooling plays little role in

explaining cross country variation in growth rate

Benhabib and Spiegel (1994) found out that the initial level of average education per worker

is a significant determinant of output growth. They argued that education levels make the

adoption of technology easier.

David Cook (2000) in his paper education and growth used instrumental variables estimate

approach which drew much of data from variation within developing economies. His paper

showed that human capital positively affects productivity which invariably leads to increased

economic growth.

Birdsall (2013) uses data from Malaysia, Ghana and Peru to show that education has a strong

effect on labor productivity especially in agriculture. He came up with the conclusion that

each extra year of a farmers schooling is associated with an annual increase in output of 2 to

5 percent.

Foster and Rosenzwig (2015) demonstrate that increased education is associated with factor

technology and adoption in green revolution India. Similarly, higher education levels have

been shown to increase innovation in businesses in Sri-lanka.

Deraniyagela (1995) showed that skill and education levels of workers and entrepreneurs

were positively related to the rate of technical change of the firm.

World Bank (2017)) observed that education substantially increased farm productivity in

countries like Korea, Malaysia and Thailand.

23
Brunette et al (2019) indicated the significance of massive investment in both primary and

lower secondary education on the pattern of growth in East Asia and they argued that massive

investment in education significantly explains development “miracle” experienced in the sub

region.

Michael (2014); Herz (2018); Hill and King (20111) demonstrated empirically that female

education positively affects the efficiency with which they combine various inputs in order to

produce the optimal set of outputs. Evidence from Herz (2016) suggests that in both

developed and developing countries education may well be the single most effective way to

enhance women’s economic productivity and promote family wellbeing.

Grammy and Assane (2016) using varied forms of human capital investment shows that

human capital formation propels growth in per capita income. Its positive contribution to

growth was statistically significant at 1 percent.

Okedera’s (2018) study used a three year experimental adult literacy programme of the

University of Ibadan to generate the private and social benefits associated with formal and

informal primary education. He calculated the private rates of return on formal primary

education to be 10.6 percent and adult literacy level was 17.8. The corresponding social rates

of return were 8.5 and 14.7 percent for formal and informal primary education. By

implication both formal and informal primary education does not only increase productivity

through earnings, but also through increased capacity for future possibilities, which

invariably translates into growth.

Mbanefoh (1980) as cited in ‘Impact of Human Capital on Economic in Nigeria. An error

correction approach. Carried out the cost –benefit analysis of university education in Nigeria

and his conclusion was that investment in university education is always profitable when any

discount rate is between one and ten is used.

24
2.5 Summary of the Review

It is obvious that from the reviewed literatures above, Human capital development and other

associated independent variables for the purpose of this study have positive impact on

economic growth. This however implies that increase in human capital development has a

way of increasing economic growth of society. On the other hand, a decrease in human

capital development will result to a decrease in the output level of society. Despite this

positive relationship, many scholars have not meature the degree of positivity of human

capital development, investment and foreign direct investment (FDI) on economic growth.

Conclusion and recommendation of authors and other scholars centers on policy options that

are guide towards increasing Human capital development, investment, foreign direct

investment (FDI) and other determinants of economic growth to maintain sustainable growth.

25
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter tries to explain the method adopted by the researcer in evaluating the impact of

human capital development on economic growth.

3.2 Theoretical Framework

Different models of economic growth stress alternative causes of economic growth. The

principal theories of economic growth include:

3.2.1 Mercantilism: Wealth of a nation determined by the accumulation of gold and running

trade surplus

3.2.2 Classical Theory: Adam Smith placed emphasis on the role of increasing returns to

scale (economies of scale/specialisation)

3.2.3 Neo Classical Theory: Growth based on supply-side factors such as labour

productivity, size of the workforce, factor inputs.

3.2.4 Endogenous Growth Theories: Rate of economic growth strongly influenced by

human capital and rate of technological innovation.

3.2.5 Keynesian demand-side: Keynes argued that aggregate demand could play a role in

influencing economic growth in the short and medium-term. Though most growth theories

ignore the role of aggregate demand, some economists argue recessions can cause hysteresis

effects and lower long-term economic growth.

26
Limits to Growth: From an environmental perspective, some argue in the very long-term

economic growth will be constrained by resource degradation and global warming. This

means that economic growth may come to an end reminiscent of Malthus theories.

Mercantilism

Popular at the start of the industrial revolution, Mercantilism isn’t really a theory of economic

growth but argued that a country could be made better off by seeking to accumulate gold and

increasing exports.

Classical Model

Developed by Adam Smith in Wealth of Nations (1776), Smith argued there are several

factors which enable increased economic growth.

Role of Markets in determining Supply and Demand

The productivity of labour: Smith argued income per capita was determined by “the state of

the skill, dexterity, and judgment with which labour is applied in any nation” (Wealth of

Nations I.6)

Role of Trade in Enabling Greater Specialisation

Increasing returns to scale – e.g. specialisation we see in modern factories and the economies

of scale of increased production

Ricardo and Malthus developed the classical model. This model assumed technological

change was constant and increasing inputs could lead to diminishing returns. This led to the

gloomy predictions of Malthus that the population would grow faster than the world’s

capacity to feed itself. Malthus under-predicted the capacity of technological improvements

to increase food yields.

27
Neo-Classical model of Solow/Swan

The neo-classical theory of economic growth suggests that increasing capital or labour leads

to diminishing returns. Therefore, increasing capital has only a temporary and limited impact

on increasing the economic growth. As capital increases, the economy maintains its steady-

state rate of economic growth.

To increase the rate of economic growth in the Solow/Swan model we need:

 An increase in proportion of GDP that is invested. However, this is limited as higher

proportion of investment leads to diminishing returns and convergence on the steady-state

of growth.

 Technological progress which increases productivity of capital/labour

It suggests poor countries who invest more should see their economic growth converge with

richer countries.

Criticisms of this neo-classical (Exogenous model)

 It doesn’t explain why countries have different levels of investment as % of GDP

 Some developing countries don’t attract higher levels of investment because of structural

problems such as corruption, lack of infrastructure.

 It doesn’t explain how to improve rates of technological progress.

Harrod Domar model – Savings Ratio and Investment

The Harrod-Domar model is a type of neo-classical model. It states growth rate depends on a

function of the savings rate.

28
Some growth theories place a large emphasis on increasing domestic savings. Savings

provide the necessary funds to finance investment. It is this investment which creates further

growth. This has been an important factor behind the economic growth in Asia.

However, it depends on how efficient the investment is. If savings is too high it leads to

lower growth because people cannot afford to consume.

New Economic Growth Theories (Endogenous growth)

Endogenous growth models, developed by Paul Romer and Robert Lucas placed greater

emphasis on the concept of human capital. How workers with greater knowledge, education

and training can help to increase rates of technological advancement.

They place greater importance on the need for governments to actively encourage

technological innovation. They argue in the free market classical view, firms may have no

incentive to invest in new technologies because they will struggle to benefit in competitive

markets.

The model places emphasis on increasing both capital and labour productivity. States that

increasing labour productivity does not have diminishing returns, but, may have increasing

returns. They argue that increasing capital does not necessarily lead to diminishing returns as

Solow predicts. They say it is more complicated; it depends on the type of capital investment.

Increased importance of spillover benefits from a knowledge-based economy.

Emphasis is placed on free-markets, reducing regulation and subsidies. The argument is that

we need to keep economies open to the forces of change.

29
Joseph Schumpeter argued that an inherent feature of capitalism was the ‘creative

destruction’ – allowing inefficient firms to fail was essential for allowing resources to flow to

more efficient channels.

Unified Growth Theory

Developed by Oded Galor, unified growth theory tries to combine many different elements of

economic growth

Economic stagnation that characterized most of human history until the eighteenth century

First industrial revolution and the beginning of economic growth

The role of human capital formation in economic growth

Explaining divergence in economic growth across countries.

Economic Growth for Developing Countries

Other theories have been suggested for developing countries. Amartya Sen and Joseph

Stiglitz.

The Malthus Predictions

It is argued that economic growth may have limitations caused by lack of raw materials,

climate change and overcrowding. Given the failure of T.Malthus predictions to come true,

these theories are often rubbished. Nevertheless, there may come a time when growth is

constrained by environmental factors.

30
3.3 Research Design

The use of secondary data from Central Bank of Nigeria(CBN), National Beaure of

Statistics(NBS) and other notable world organization will be adopted. Ordinary least square

(OLS) regression approach will be used to test for causality relationship between dependent

and independent Variables in the Model. The expost facto research design is considered.

3.4 Variables in the Model

In examining critically the impact of human capital development on economic growth in

Nigeria, the reliable variables for the purpose of this study include:

Dependent variable: Economic growth (Y)

Independent variables: Human capital development (HDI), Investment (I) and foreign Direct

Investment (FDI).

3.5 Model Formulation and Specification

The model of this study recognizes theoretical, statistical and econometric approaches. The

evaluation of the model by way of Theoretical approach encompasses the validity of the

estimated parameters to the study expectation. The statistical approach makes use of the F-

statistics, coefficient of determination and P- values to test the significance level of the

reliability of the explanatory variables in predicting the variability of the regression and, the

significance level of the entire estimated model. In order to test for the stationary level of the

data for the study. Econometric approach is applied to evaluate or test the order of stationary/

cointegration of the collected data in order to avoid spurious regression analysis. To achieve

this, the Augmented Dickey-Fuller (ADF) is considered to test the presence of unit root.

31
The specification of the model for this study is with reference to the objectives of this study

and with respect to mathematical forms. This is shown as follows:

Y = f( HCD, INT, FDI) (1)

Y = β0 + β1HCD +β2Int +β3FDI (2)

Where:

Y is economic growth level

HCD is Human Capital Development

INT is investment and

FDI is foreign direct investment.

β0 is the intercept of the model

β1, β2 and β3 are independent Variables parameters.

The assumed or priori expectation of the model is β0, β1, β2, and β3 >0.

The econometric specification of the model is given this:

Y= B0 + B1HCD + B2Int + B3FDI + u (3)

From the enonometric model, u is the random/ error term which represents the effects of

other variables not captured in the Model but which can in one way or the other influence the

level of economic growth.

32
3.6 Methods of Data Analysis

The procedure in the analysis would adopt multiple regression econometric procedure. The

study would commence analysis with Dickey-Fuller test, to verify, the stationary variables so

as to avoid spuriousness of empirical result. The t-test is to be used to ascertain the

significance of each of the constant parameters, while the diagnostic test based on the

coefficient of determination (R2) will be used to check for the goodness of fit of the model.

3.7 Model evaluation

In evaluating the model, the ordinary least square regression will be used to obtain numerical

values of the model coefficients. With statistical significance at 5% level, the probability of

the t- test statistics will be used to evaluate the estimated numerical values of the coefficient

of the simple linear regression for reliability of the variables in predicting the impact of HDI

on economic growth. The variables are evaluated based on the R- square and Adjusted R-

square. Augmented Dickey-Fuller (ADF) test is employed to test of stationarity (unit root)

while probability values of coefficient will be used to evaluate the long run and short run

relationship between the variables in the model.

3.8 Data and Data Sources

Data were sourced from Central bank Statistical bulletin from 1990 to 2020. This Model

assessed the impact of human capital development on economic growth in Nigeria.

Secondary data applied in this study were gathered from Central bank of Nigeria statistical

bulletin from 1990 to 2020. Regression analysis technique was used to examine the effects of

independent variables on dependent variable, and Pearson product moment correlation was

used to examine the significant relationship among the variables.

33
REFERENCES

Adamu.P.A. The impact of human capital on economic growth: an error correction

approach. Human resource development in Africa selected papers for the 2000 annual

conference. Nigerian Economic Society Publication.

Aghion and Howitt (1998). Endogenous Growth Theory .M.I.T Press.

Economic Growth and Human Capital development: the case of Nigeria by K.K

Ogujiuba and A.O. Adeniyi.

Human Capital Investment and the Empirics of Economic Growth in Nigeria:

Ayodele F. Odusola.

Lucas 1998; Romer 1987; Azariadis and Drazen 1990; Mankiw et al 1992; UNDP

1996; as cited in Human Capital Investment and the Empirics of Economic Growth in

Nigeria: Ayodele F. Odusola.

34
Mankiw et al 1992; UNDP 1996; Lucas 1998; as cited in The Impact of Human

Capital on Economic growth in Nigeria; An Error correction Approach by Patricia A.

Adamu.

Robert Solow 1956: as cited in ‘ Human Capital Investment and the Empirics of

Economic Growth in Nigeria.’ Ayodele F. Odusola.

Salleh 1992.As cited in ‘Human Capital Investment and the Empirics of Economic

growth in Nigeria’. Ayodele F. Odusola.

Solow 1957; Khan 1997; Iyoha 2000. As cited in ‘impact of human capital on

economic growth: An Error correction Approach.Patricia A. Adamu.

35
CHAPTER FOUR

DATA ANALYSIS AND INTERPRETATION

4.1 INTRODUCTION

This chapter is for the interpretation of the result estimate carried out. It includes the

presentation of data which will be in tabular form, data analysis and the discussion of the

result.

4.2 PRESENTATION OF DATA

In this empirical study the methodology used is the ordinary least square (OLS) method. On

each model we carried out an ordinary least square estimation. The results were examined

and in the view of the presence of autocorrelation we used the method proposed by

36
Cochrane- Orcutt. The data for the variables used were obtained for the year 1977- 2004. The

data obtained is as follows:

GDP = this represents the Gross Domestic Product which is used to capture economic

growth.

LA = Labour force in the economy

GCFC= Gross Capital Formation

FDI = Foreign Direct Investment

EXPD = Total government expenditure on education which was used to proxy Human

Capital.

The result of the regression is presented in tables 1 and 2 below.

4.3 DATA ANALYSIS AND RESULTS

This section focuses on the results from the estimation carried out and its critical evaluation.

The model relates economic growth to four variables namely; labour (LA), gross capital

formation (GCFC), foreign direct investment (FDI) and total government expenditure on

education (EXPD).Results of this estimation is presented in the table 1 below.

Table 1: Ordinary Least Square Estimation.

Dependent Variable in LOGGDP.

28 observations used for estimation from 1977 – 2004

37
 Regressor Co-efficient Standard Error T-values

Constant 8.5302 0.85431 9.9849

LOGLA 0.56443 0.26117 2.1612

LOGGCFC 0.067895 0.036845 1.8427

LOGFDI -0.032871 0.031417 -1.0463

LOGEXPD 0.058039 0.025559 2.2708

R2 =0.75127

R2 = 0.70801

D.W = 0.97195

F (4, 23) = 17.3674

On the basis of apriori specification the sign of the variables conforms to apriori expectation

except foreign direct investment. A correlation matrix test was carried out and it showed that

there was the presence of multicollinearity between labour and total government expenditure

on education. One of the implications of the presence of multicollinearity is that it will make

one or more of the variables to be statistically insignificant. The model estimate presented in

tables 1 and 2 is in logarithmic form (double log) therefore the co-efficient of the variables

represent the elasticity’s of the variables .therefore the absolute values of the individual

variables are taken into consideration meaning the negative are ignored. In the light of this

the negative signs that appear in LOGFDI and LOGEXPD will be ignored.

38
This regression estimate obtained shows that the model is a good fit as only about 25% of the

model can not be accounted for. This is shown from the value of R 2. TheR2 shows that

Labour Force (LA), Gross Capital Formation (GCFC), Foreign Direct Investment (FDI) and

Total government expenditure in education accounts for about 70% of the changes in

economic growth. The value of the F-Statistic or the F-Test shows that the model overall is

significant and that all the slope co-efficient are simultaneously different from zero.

The DW value of 0.97 shows that there is the presence of first order serial correlation; this

was corrected using the Cochrane –Orcutt method for autocorrelation. The result for the

correction is presented in table 2 below.

Table 2 OLS Corrected for Autocorrelation Cochrane – Orcutt Method

Dependent Variable is LOGGDP

39
 28 observations used for estimation from 1977 – 2004

Regressor Co-efficient Standard Error T-values

Constant 6.5184 0.11106 58.6944

LOGLA 1.2386 0.029125 42.5263

LOGGCFC 0.038917 0.010028 3.8807

LOGFDI 0.0040021 0.0030093 1.3299

LOGEXPD -0.0063343 0.0030200 -2.0974

R2 =0.99942 R2 =0.99870

D.W = 2.0770

F (11, 9) 1399.9

After correcting for autocorrelation the model estimate gives us a very good fit as only about

1% of the systematic variations in the model can not be accounted for.

The R2 shows that labour, gross capital formation, foreign direct investment and total

government expenditure on education accounts for about 99% of the changes in economic

growth.

The F-value shows that all the variables used in the model are statistically significant. In

other words the model is statistically significant. The DW value shows that there is no

autocorrelation in the model.

40
4.4 DISCUSSION OF RESULT

The model estimates presented in tables 1and 2 are in logarithmic form and there is the

presence of multicollinearity which accounts for the negative signs.

Foreign direct investment is not statistically significant in both models following the T- test.

This is due to the presence of multicollinearity. One of the implications of the presence of

multicollinearity is that it makes one or more variables to be statistically insignificant. Using

this model therefore we can then say that there exists an inelastic relationship between FDI

and economic growth meaning that a proportionate change in FDI will bring about a less than

proportionate change in economic growth.

Using the T- test labour is statistically significant at 5% level and its co-efficient using the

values in table 2 shows that a 1% increase in labour will bring about a 1.23% increase in

economic growth. A 1% increase in gross capital formation will bring about a 0.38% increase

in economic growth and a 1% increase in government expenditure will bring about a 0.006%

increase in economic growth.

If all the independent variables have a co-efficient of zero the constant(C) shown in the result

will then mean that the economy will grow by 65%. Bernadette Andresso in his paper Human

Capital Accumulation and Economic Growth in Asia found out that FDI was statistically

insignificant but all other variables were statistically significant Going by this finding we can

therefore conclude that;

41
1. Foreign direct investment does not have much impact on economic growth.

2. Human capital proxied by total government expenditure on education has an impact

on economic growth.

3. Labour and gross capital formations also have an impact on economic growth.

42
REFERENCES

Econometrics Lecture Note: 300 level omega semester.

Bernadette Andresso (2002): Human Capital Accumulation and Economic Growth in Asia.

43
44
CHAPTER FIVE

5.1 SUMMARY AND CONCLUSION

In this project, an empirical investigation was carried out to determine the impact of human capital

on economic growth, using the ordinary least square technique. The result of the estimation shows

that investment in human capital in the form of education can lead to economic growth which has an

effect on productivity. The result also shows that people (human resource) are the ones to actually

bring about economic growth.

5.2 FINDINGS

The theories found in the course of writing this project includes; Solow’s growth model and the

Human Capital theory.

Solow’s growth model during the 1960’s and 1970’s centered mainly on tangible(physical) capital

formation as the driver of economic growth in conjunction with an exogenity factor that increases

productiveness. This exogenity factor was questioned in various literatures and it was concluded that

what increases the productivity is not an exogenous factor, but an endogenous one which is assumed

to be related to knowledge and behavior of the people. Empirical findings during the course of this

research show that investment in human capital in the form of total government expenditure on

education has an impact on economic growth. Likewise labour force and gross capital formation also

has an impact on economic growth. Foreign direct investment in this work has little impact on

economic growth.

45
5.3 RECOMMENDATIONS

In line with the findings in this project as to how human capital affects economic growth the

following recommendations have been put forward. Since education is one of the main basis of

investing in human capital the government should endeavor to;

1. Improve teachers and lectures salaries and working conditions in all educational institutions.

2. Expand the available institutions by improving by providing more infrastructures to the existing

ones.

3. Policies being put forward should be education friendly.

4. Improve health care facilities.

5. Create an enabling environment by ensuring economic stability that will encourage investment in

human capital by individuals and private sector.

5.4 CONCLUSION.

This project has explored empirically the relationship between human capital and economic growth

in Nigeria, using the ordinary least square technique. It reveals that investment in human capital

46
 proxied by total government expenditure on education, labour force and gross capital formation has

an impact on economic growth.

This study was limited in many ways but due mainly to time and financial constraints. The area of

education as a form of investment in human capital has been researched extensively and other areas

have not actually been researched upon. Areas like investments in Medicare having an impact on

economic growth can also be researched in order to contribute to knowledge.

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Investment and the Empirics Of economic Growth in Nigeria: Ayodele .F. Odusola

National Centre for Economics Managerial Administration (NCCMA).

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