ABSTRACT
Although several theories of growth point towards a
positive effect of human capital on growth, empirical evidence on this issue
has been mixed. Using the Correlation and Regression analyses, this work
examines empirically the role of human capital in Nigeria's economic
development. Empirical results indicate that there is, indeed a long-run
relationship among labour force, physical capital investment proxied by real
gross domestic capital formation, human capital formation, proxied by
enrollment in educational institutions and economic growth in Nigeria. Findings
show that there is a feedback mechanism between human capital formation and
economic growth in Nigeria, Thus, the policy implication of the findings is
that government should place a high priority on human capital development.
Efforts should be intensified to increase investment in human capital to
achieve the growth which would engender economic development. Most importantly,
education should be given prominence in Nigeria's developmental efforts. This
would propel the economy to higher level of productivity.
TABLE OF CONTENTS
CHAPTER ONE
(INTRODUCTION)
1.1 Background to the study
1.2 Statement of the research problem
1.3 Objectives of the study
1.4 Statement of the research questions
1 .5 Statement of the research hypotheses
1.6 Sources of data and methodology
1.7 Scope of the study
1.8 Significance of the study
1.9 Plan of the study
CHAPTER TWO
(LITERATURE REVIEW)
2.1 Meaning of human capital development
2.2 Relationship between human capital development and
economic growth
2.3 Health and education as component of human capital
2.4 Human capital development: Investing in Health and
education
2.5 Human capital development in Nigeria
CHAPTER THREE
(RESEARCH METHODOLOGY)
3.1 The data set and sources
3.2 Restatement of the hypotheses
3.3 Model specification
3.4 Methodology and a priori expectations
CHAPTER FOUR
DATA
PRESENTATION AND ANALYSIS)
4.1 Presentation of data
4.2 Analyses of data and interpretation of result
4.3 Statistical decision
CHAPTER FIVE
SUMMARY,
CONCLUSION AND RECOMMENDATION
5.1. Summary of findings
5.2 Policy recommendation
5.3 Conclusion
BIBLIOGRAPHY
APPENDICES
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
The role of human capital in economic growth cannot be overemphasized.
The development of human capital has been recognized by economists to be a key
prerequisite for a country's socio-economic and political transformation. Among
the generally agreed causal factors responsible for the impressive performance
of the economy of most of the developed and the newly industrializing countries
is an impressive commitment to human capital formation.
(Adedeji and Bamidele, 2003; World Bank, 1995, Barro,
1991). This has been largely achieved through increased knowledge, skills and
capabilities acquired through education and training by all the people of these
countries.
It has been stressed that the differences in the level of
socio-economic development across nations is attributed not so much to natural
resources and endowments and the stock of physical capital but to the quality
and quantity of human resources. According to Oladeji and Adebayo (1996) human
resources are critical variables in the growth process and worthy of development.
They are not only means but, more importantly, the ends that must be served to achieve
economic progress. This is underscored by Harbinson (1973) who opined that "human
resources constitute the ultimate basis for the wealth of nations. Capital and
natural resources are passive factors of production: human beings are the
active agents who accumulate capital, exploit natural resources, and build social,
economic, and political organizations. And carry forward national development.
Clearly a country which is unable to develop the skills and knowledge of its
people and to utilize them effectively in the national economy will be unable
to develop anything else".
Nigeria's most glaring objective since independence in
1960 has been to achieve stability, material prosperity, peace and social
progress. However, this has been hampered as a result of internal problems.
These include inadequate human development, primitive agricultural practices,
weak infrastructure, and uninspiring growth of the manufacturing sector, a poor
policy, inadequate regulatory environment and mis-management and misuse of
resources (corruption). In order to ensure the economy delivers on its
potentials, 'the country experimented with two development philosophies-a
private sector-led growth in which the private sector served as the
"engine house" of the economy and a public sector - driven growth in
which the government assumed the "commanding heights" of the economy.
The initial low level of private sector development, however, led to public
sector dominance of the economy, encouraged by growth in the oil sector (UNDP,
2009).
It is noteworthy that since the advent of civilian rule
in 1999, growth performance has improved significantly. The last seven years
witnessed an average growth rate of about 6 percent (UNDP, 2009:5; CBN, 2008)
However, economic growth has not resulted in appreciable decline in unemployment
and poverty prevalence. Human development has remained unimpressive as shown by
the indicators in Table 1.
Table 1: Nigeria's Human Development Summary
Statistics by Zones, 2009
|
Zones
|
Human
|
|
Human
|
Gender
|
Gender
|
Inequality
|
|
|
Development
|
Poverty
|
Development
|
Empower
|
Measure
|
|
|
Index
|
(HDI
|
Index
|
Measure
|
ment
|
(INQ)
|
|
|
Value)
|
|
(HPI)
|
(GDM)
|
Measure
|
|
|
|
|
|
|
|
(GEM)
|
|
|
North Central
|
0.490
|
|
34.65
|
0.478
|
0.244
|
0.49
|
|
North West
|
0.420
|
|
44.15
|
0.376
|
0.117
|
0.44
|
|
North East
|
0.322
|
|
48.90
|
0.250
|
0.1.18
|
0.42
|
|
South West
|
0.523
|
|
21.50
|
0.507
|
0.285
|
0.48
|
|
South East
|
0.471
|
|
26.07
|
0.455
|
0.315
|
0.38
|
|
South South
|
0.573
|
|
26.61
|
0.575
|
0.251
|
0.41
|
Source: UNDP (2010:5) Summary: Human
Development Report Nigeria 2009-2010, UNDP, Abuja
1.2 STATEMENT OF THE RESEARCH PROBLEM
Over the years, successive Nigerian governments
recognized the importance of human capital formation in the development process
and have embarked on various programmes and projects which led to the
establishment of educational institutions and health Centre’s throughout the
country. However, in the late 1970s and early 1980s, federal government
spending grew substantially resulting in fiscal crisis, inflation, and heavy
borrowings.
Subsequently, through the austerity measures adopted in 1982
and Structural Adjustment Programme (SAP) introduced in 1986, the country
attempted to bring down fiscal deficits as part of its stabilization and
adjustment programmes, often by reducing public spending on across-the board
basis. These reductions resulted in unprecedented economic and social costs as
human resources development was neglected with adverse long-term development consequences
(Oyinlola and Adam, 20_03). Thus, the ultimate goal of economic development which
underscored the need to improve the well-being of people was overlooked.
In more recent times, renewed attention was paid to the
role of human capital formation in the country's development process and this
has prompted the federal government to declare in its 1999-2003 economic policy
programme that "the economy exists for and belongs to the people, and at
all times the general well-being of all the people shall be the overriding
objectives of the government and the proper measure of performance" (FGN,
1999). This .policy statement of the government is further reiterated in the
National Economic Empowerment and Development Strategy (NEEDS). The provision
of high-quality education and health care to all the country's citizens is
considered a key element of public policy by all levels of government. Also, in
the early part of this year, just before the general election, President Good
luck Jonathan approved the establishment of new universities in order to
enhance access to tertiary education and thus boost human capital development.
Though, the wisdom behind the creation of new universities, to satisfy
political needs, when the existing ones are grossly under-funded, is
questionable.
Against this background, there is the need to examine if
there truly exists a relationship between human capital development and
economic development on the one hand, and also determine if investment in
education and health care has really been boosting human capital development.
1.3 OBJECTIVES OF THE STUDY
Following are the objectives for which this work is done.
·
To examine the
impact of human capital formation on economic development in Nigeria between
1983 and 2010;
·
To determine if
investment in education has been appropriately leading to economic development;
·
To establish if
there exists a link between health care development and economic development;
·
And on the basis of
the findings, recommend policies and measures for improving human capital
formation in the country.
1.4 STATEMENT OF THE RESEARCH QUESTION
As a follow up to the preceding objectives, the following
are the appropriate research questions.
·
Is there a
significant relationship between human capital formation and economic
development in Nigeria?
·
Is the relationship
between investment in education and economic development significant?
·
Is there a
significant relationship between health care development and economic
development?
1.5 STATEMENT OF THE RESEARCH HYPOTHESES
In order to be able to provide answers to the questions
stated above, the following null and alternative hypotheses are tentatively
stated.
Hypothesis I
H0: There is no
significant relationship between human capital formation and economic
development in Nigeria between 1983 and 2010.
HI: There is a significant relationship between human capital
formation and economic development in Nigeria between 1983 and 2010.·
Hypothesis II
H0: The relationship between
investment in education and economic development in Nigeria is not significant.
HI: The relationship between investment in education and
economic development in Nigeria is significant.
Hypothesis III
H0: There is no
significant relationship between health care development and economic
development.
HI: There is a
significant relationship between health care development and economic
development.
1.6 SOURCES OF DATA AND METHODOLOGY
The data for this study would be obtained mainly from
secondary sources, particularly from Central Bank of Nigeria (CBN) publications
and that of the Federal Office of Statistics and relevant journals, textbooks
and financial newspapers. The data to be collected include: gross domestic
product (which is used to denote economic development), enrolment in
educational institution, which is used to denote human capital formation; and
spending on education and health care development.
The research work will make use of the Statistical
packages for Social Sciences (SPSS) in estimating the relationship between the
variables as proposed by the respective hypothesis. The Ordinary Least Square
(OLS) technique will be employed in obtaining the numerical estimates of the
coefficients in the model to be formulated. The OLS method is chosen because it
possesses some optimal properties; its computational procedure is fairly simple
and it is also an essential component of most other estimation techniques. The
estimation period will cover 1983 through 2010.
1. 7 SCOPE OF THE STUDY
The economy is a large component with a lot of diverse
and sometimes complex parts such that a lot of variables do interplay in order
to initiate the development process. This work will however limit its
searchlight on the contribution of human capital development/formation on
economic development. Also, human capital formation is a variable that is
largely dependent on a host of factors other than educational and health care
development. Yet, these two are chosen because they are considered to be the
most important determinant of human capital formation. Thus, the scope of this
work is defined by the chosen variables.
1.8 SIGNIFICANCE OF THE STUDY
The study will explore the impact or effectiveness of
human capital formation on Nigerian economic development. At the successful
completion of this work, it is expected that it will contribute to existing
literature on the subject matter by investigating empirically the role, which
human capital formation play on economic development of the country, and the contribution
of education and health care delivery to human capital formation .. The-main
importance of this study is that it will provide policy recommendations to
policy-makers on ways to improve the relationship between human capital
formation and economic development, and how investment in education and health
care delivery will appropriately lead to the development of human resource.
1.9 PLAN OF THE STUDY
Following this chapter, chapter two presents a review of
relevant literature while chapter three outlines the analytical framework and
the model. Chapter four presents and discusses the empirical data and results
while chapter five concludes the work.
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