Abstract
This paper examines the economic growth effect of human capital in Nigeria using annual time series dataset spanning 1970 to 2017. Life expectancy and schooling were the human capital components considered while the growth rate of Gross Domestic Product captures economic growth. The Two-Stage Least Squares approach was adopted in the analysis after testing for unit root and cointegration among variables. Results indicate that both physical and human capital exerts a significant positive impact on economic growth in Nigeria. Specifically, life expectancy, secondary and tertiary school enrolments - components of human capital - significantly spur economic growth while primary school enrolment and average years of schooling have no significant effect on the economic growth of the country. The paper recommends, amongst others, that all levels of government should raise the percentage of health and education funds in their financial disbursement for optimal performance of the economy. Keywords: Life expectancy, Schooling, Human Capital, Economic Growth, Two-Stage Least Squares. DOI: 10.7176/JESD/11-16-10 Publication date: August 31 st 2020
Highlights
In this era of the knowledge economy, the key to international competition is high-quality human capital
The results show that with the average years of schooling for each additional year, the labour productivity in the EU countries was increased by 6.2% due to the promotion of scientific and technological progress, and the average years of schooling for each additional year may bring long-term economic growth of 3.1%
The model used is not spurious i.e the variables are stationary since the Augmented Dickey-Fuller (ADF) and Philip Peron (PP) values are greater than the critical values of the variables, in absolute terms
Summary
In this era of the knowledge economy, the key to international competition is high-quality human capital. The knowledge economy addresses how education and knowledge, that is, "human capital," can serve as a productive asset or business product to be sold and exported to yield profits for individuals, businesses, and the economy. This component of the economy relies greatly on intellectual capabilities instead of natural resources or physical contributions. As the most populous country in Africa, to improve its high-quality human capital, needs to settle primary problem first—to decide what kind and which level of education should be the priority of the education development strategy, considering her current limited resources. Education can improve labour quality, drive the spread of new knowledge and improve labour’s ability to introduce, imitate and apply advanced technologies, the conclusion of empirical research is uncertain(Temple, 2001)
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