Impact of Human Capital Development on Economic Growth

Evidence from Nigeria

Abstract

The study examined the impact of human capital development on economic growth in Nigeria from 1986 to 2019. The ex-post facto research design was adopted in the research. Multiple regression analysis was utilized in the study in which the co-integration test and Vector Error Correction Model (VECM) model were the methods of analysis employed in the analysis. The co-integration test was engaged to investigate the long-run equilibrium relationship among the variables, while the VECM was employed to examine the long-run relationship and short-run interactions among the variables. The variables analyzed in the study include gross domestic product as the dependent variable, while life expectancy, total government expenditure on education, total government expenditure on health, primary school enrollment, external debt and private domestic investment were employed as the independent variables. The results indicated evidence of a long-run equilibrium relationship among the variables. The estimation results showed that life expectancy and total government expenditure on health have a positive and significant impact on gross domestic product in Nigeria. Similarly, the results indicated that total government expenditure on education and primary school enrollment have a negative and significant influence on gross domestic product. Furthermore, the estimation results revealed that external debt and private domestic investment have a positive and insignificant influence on gross domestic product. Thus, since life expectancy has a positive and significant impact on economic growth in Nigeria, government should, as a matter of fact, formulate and implement human capital empowerment policies that ensure improvement in the standard of living of the citizenry in the country. Hence, improve good life of the citizens leading to higher life expectancy; the skills and knowledge acquired would be utilized in productive ventures, which will in turn, result in increase in economic growth in the economy. Based on the results, 1% increase in life expectancy brings about a 12.97% increase in economic growth in Nigeria.