Abstract
This study examines the belief that education fosters economic growth by analyzing the impact of Government education expenditures at different levels on economic growth using Nigerian data for the period 1980-2018. Time series econometrics tests like Unit Root, cointegration, Error Correction Model and Granger Causality were employed to test the hypothesis of education expenditure-led growth strategy. The outcomes of the studies showed that that there is cointegration between total government education expenditures, primary, secondary and tertiary education expenditure and economic growth. The outcomes of the study also revealed that all levels of education expenditure contribute to economic growth positively (tertiary education exerting more positive impact) and are statistically significant (except primary education expenditure that is not significant) at 5%level. The study equally revealed bi-directional causality between t all levels public expenditure on education and economic growth. The study therefore, recommends improved funding for education at all levels given their interconnections. It also recommends that funding of primary education should by supported Federal Government as weak primary school funding will impact on quality of pupils that graduate to secondary school. Again policies aimed at diversifying and broadening the Nigerian economy be rekindled as economic growth have the potential of increasing education spending.
Highlights
One major concern for developing economies in growth literature is the attainment of development-induced growth that will address the myriad development challenges such as poverty, unemployment, and human development deficiency confronting developing countries, including Nigeria
The human capital is defined by total government expenditure in education (TED) which is further decomposed into primary education expenditure(PEE), secondary education expenditure (SEE) and tertiary education expenditure, a deviation from previous studies
A significant body of literature has examined the correlation between education expenditure and economic growth in developing countries (See Kirian 2013; Lawanson, 2009; Dauda, 2010; Mercan and Sezer, 2014; Mitchell, (2005), Yildirim et al 2011; Gisore et al 2014; Jaiyeoba 2015; results of empirical investigations remain inconclusive, and outcomes of recent studies show that the contribution of education expenditure to economic growth could be ambiguous (Rankaduwa et al 2017)
Summary
As a critical component of human capital, education has the potential for making growth inclusive by widening the earning pool of the educated, increase productivity, wages, opportunities for better employment and general well-being of the people (Lawanson 2009; Dauda 2010) It can be argued based on the above submissions that education investment is a potent political tool in the fight against development challenges confronting developing countries (UNDP, 1990). This study besides contributing to the debate on the actual effect of education expenditure disaggregate government expenditure into different levels of education (primary, secondary and tertiary) to determine their impact on economic growth for effective education expenditure policies in Nigeria This is an area yet to be covered extensively by existing studies (Lawanson, 2009; Dauda, 2010; Omojimite, 2012, among others). It intends to examine the feedback effects of education-growth channels in Nigeria
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