Human Capital Development and Industrialization in Nigeria: Implication for Economic Growth

Abstract

This paper examines the role that human capital plays in the relationship between the industrialization process and growth in Nigeria spanning the period 1980 to 2016. The theoretical framework is rooted in one of the new growth theories traceable to Lucas (1988) with emphasis on human capital's role in growth. Through some modifications, we result in two simultaneous equation models, one with growth as a dependent variable and the other, industrialization as a dependent variable. Human capital is disaggregated into male and female literacy rates, male and female life expectancies and other control variables used to explain the growth and industrialization process. The Two-Stage Least Squares adopted gives the expected outcome in most cases for the two model estimations. It is shown that the industrialization process is germane for economic growth, and likewise, male literacy rates can complement the industrial process to improve growth. In the same vein, stable growth facilitates the process of industrialization while human capital variables too play a relevant role in the same process. Identification of the workings of the Nigerian state would be a good foundation for the step towards ameliorating the problems of capacity building and industrialization in Nigeria.