Impact of Human Capital Development and Manufacturing Sector Productivity in Nigeria

Abstract

Manufacturing, the process of creating goods through tools, machinery, labour, and formulations, historically drove economic progress in the nineteenth century. While recognised for its pivotal role in economic growth and development, Nigeria's manufacturing sector struggles to significantly influence employment and GDP, despite augmented human capital. This study explores the correlation between human capital development and manufacturing productivity in Nigeria, spanning 2000 to 2022, using an ex post facto research design rooted in the Solow Swan growth model. Data sourced from the World Bank's World Development Indicators underwent analysis through Ordinary Least Square (OLS) and causality tests, with conclusions drawn at a 5% significance level. Findings indicate that primary school enrolment, industrial labour force, and physical capital lack substantial impact on manufacturing productivity, unlike gross secondary school enrolment which positively influences productivity, while tertiary enrolment has a notable negative effect. The study underscores poor human capital development, particularly in primary school enrolment and the labour force, as key factors impeding manufacturing productivity in Nigeria, emphasising the imperative of enhancing the sector's labour force quality to unleash its full potential.