Impact of human capital investment on economic growth in Nigeria: Econometric approach of Autoregressive Distributive Lag Model (ARDL)

Abstract

The study examined the impact of human capital investment on the economic growth in Nigeria over a period of 1985 to 2021. Specifically, the study sought to: i) determine the impact of government expenditure on education on the economic growth in Nigeria; ii) ascertain the impact of government expenditure on health on the economic growth in Nigeria; iii) evaluate the impact of tertiary school enrolment rate on the economic growth in Nigeria. The variables of the study consist of real Gross domestic Product (RGDP), inflation rate (INFLA), exchange rate (EXCHR), education government expenditure (EGE), health government expenditure (HGE), primary School enrolment rate (PSER), secondary school enrolment rate (SSER) and tertiary school enrolment rate (TSER), child mortality rate (CMR) and life expectancy at birth (LIFE). The data analytical techniques were descriptive Statistics, Augmented Dickey-Fuller Unit Root test and Autoregressive distributive Lag Model. The following are the major findings of the study: i) education expenditure (EGE) had 43% positive and insignificant impact on the economic growth in Nigeria [P-value (0.8508) was greater than its significant value (0.05]; ii) health expenditure (HGE) had 8% positive and insignificant impact on economic growth in Nigeria [P-value (0.1925) was greater than its significant value (0.05]; iii) tertiary school enrolment rate (TSER) had 48% positive and insignificant impact on the economic growth in Nigeria [P-value (0.2660) was greater than its significant value (0.05]. This study concludes that the human capital investment has positive and insignificant impact on the economic growth in Nigeria. The study recommends that government should start and sustain allocating 20 percent increase of funds to capital expenditure on education to provide facilities such as libraries, laboratory equipment, computers and modern learning equipment. Government should attract international donor agencies like World Bank, United Nations and UNESCO to help and put funds into the educational sector.