AN ECONOMETRIC SIMULATION OF HUMAN CAPITAL DEVELOPMENT AND ACTIVITY SECTOR PRODUCTIVITY IN NIGERIA

Abstract

Several studies on human capital development have ignored its effects on activity sectors of the economy in developing countries like Nigeria. This paper examined the effects of human capital development on the Nigerian real sector activity 1981 to 2022 with data from Central Bank of Nigeria’s Statistical Bulletin, and National Bureau of Statistics. This paper utilized a macro-econometric model approach anchored on the endogenous growth theory. Ex-ante forecast showed that a 4% increase in life expectancy led to improvement in industry output (50.9%) and service output (16.6%), and agriculture output decreased by 7.4%. 4% decrease in life expectancy improved agricultural output by 14.9% and worsened industry and service sectors’ outputs by 31.2% and 65.9%, respectively. A 2.0% increase in number of schooling years improved service (9.3%) and industry (3.7%) while agriculture output shrunk by 2.0% deviation. A 2% decrease in schooling year’s worsened service and industry output by 74.5% and 42.4%, respectively and improved agriculture output (24.1%). A 7.7% increase in the index of per capita GNI resulted in negative shock to service output (69%) and industry output (37%) and positive deviation of 21.5% in agriculture output. Under the index of per capita GNI decrease of 7.7%, service output deviated by 200%, industry output deviated by 47.7% and agriculture output by -19%. The study therefore recommended that quality education should be made available to all so that Nigeria’s service and industrial sectors can be revolutionized.