International Capital Inflow and Human Capital Development in A Developing African Economy: A Study Of Nigerian Economy 1987- 2018

Abstract

Extant literatures show that savings gaps in developing countries constitute critical constraints to investments in human capital and this has propelled the scramble by developing countries for international capital to fill the gaps. The paper principally examines the effect of international capital inflows (ICI) on human capital development (HCD) in a developing African economy with Nigeria as case study. The specific objectives are to investigate, determine, assess, examine and ascertain the effects of foreign portfolio investment (FPI), foreign direct investment (FDI), official development assistance (ODA), foreign remittance (RMT) and external debt stock (EXDSK) respectively on HCD. Ex-Post Facto research design on data from the Central Bank of Nigeria Statistical Bulletin and Annual Reports and the World Bank Development Indicators were adopted using Descriptive Statistics, Augmented Dicker Fuller tests for unit roots and diagnostics. The results of the Autoregressive Distributive Lag indicated that FPI had positive and significant long run and short run effect on HCD while FDI, ODA, RMT and EXDSK, only have positive and significant short run effects on HCD. The study concluded that ICI has only short run significant effects on HCD with the exception of FPI. Some of the recommendations are that: government should strengthen and deepen the capital market system in Nigeria to sustain existing FPI and attract new ones; government should avoid using ODA for long term project financing in Nigeria and that EXDSK should be contracted solely for short term investments with economic reasons as against white elephant projects without economic justifications.