Human Capital Investment and the Growth of the Nigerian Economy (1980-2018)

Human Capital Investment and the Growth of the Nigerian Economy (1980-2018)

Chapter One of Human Capital Investment and the Growth of the Nigerian Economy (1980-2018)

INTRODUCTION

Background to the Study

Human beings are the most valuable assets in both developed and developing countries; as a result, this is one of the reasons these assets need to be properly managed and effectively utilised. Hence, this can also be achieved by ensuring that adequate investment is made in human capital development by government at all levels. A study conducted by Oluwatobi and Oluranti (2018) described human capital as the collective skills, knowledge, and intangible assets of individuals that can be used to create economic values. The significance of human capital development in the achievement of meaningful and sustainable growth and development in any modern economy cannot be overemphasized (Amassoma & Nwosa, 2018). This is because, human capital development is a key prerequisite for a country’s socioeconomic and political transformation objectives (Uchendu, 2018). The work of Aigbokhan, Imahe and Ailemen (2017) revealed that human capital is recognized as an agent of national development in all countries of the world; by providing education and health services to the people and also one of the major ways of improving the quality of human resources.

In Nigeria, interest in human capital investment is pivotal for the improvement of her economy so as to accomplish the thousand years advancement objectives and goals. Nigeria administrators are progressively underlining that the development of human capital ought not to be left to irregular market forces yet ought to be coordinated, in order to be in line with other factors of production. Government’s role in the development of Nigeria’s human capital has evolved historically. In traditional Nigerian society, people acquire skills by watching elders and by following their examples thereby gaining experience in the use of more sophisticated tools and techniques overtime. Since the Nigerian economy is fundamentally subject to agriculture, most children take in some farming strategies from their parents.

The less developed nations of the world explicitly are in need of more human capital when contrasted with the labor assets of the developed nations (USA, UK, France and so forth). Nigeria is portrayed by economic lukewarmness or retrogression which shows itself in low interest in human capital, low labour efficiency, factor fixed status, constrained specialization in occupation and in exchange, an inadequate flexibly of business enterprise, customary and social establishments that limit the motivators for monetary change. The moderate development in interest in human capital has extreme controls on progress; the economic development of Nigeria stays low where there is little investment in human capital. Since independence, the nation has expanded her effort planned for expanding investment in human capital. The effort of the Nigerian government to accomplish economic growth and development has been blockaded by insufficiency of human capital and improved nature of workers.

Study carried out by Aliyu and Adamu (2018) revealed that the developed economies depend on education to foster economic growth. Consequently, health is also fundamental to economic growth and development and is one of the key determinants of economic performance both at the micro and macro levels. Thus, the Millennium Development Goals (MDGs) will be a fruitless exercise if adequate attention is not given to educational and health expenditures by the federal government (Olatunji & Tatujen, 2018). Unfortunately, in Nigeria this seems have been hampered as a result of inconsistent government policies, primitive agricultural practices, weak infrastructure, and uninspiring growth of the manufacturing sector and mismanagement of resources (Olatunji, Anthonia & Ndubisi, 2018). Thus, these identified problems have created a knowledge gap in this study; and, it is against this background that the study attempts to investigate empirically the human capital investments and its effect on economic growth in Nigeria.

Statement of the Problem

In the general sense, it has been discovered that the Nigerian government has put in a huge amount of financial resources towards the development of capital. These can be seen in the increasing trend of government expenditure on health as well as education.

This has led to an increment in the number of schools established in the country and the establishment of health centres of various capacities. This is because human capital is one determinants of economic growth through acquisition of skills and knowledge and also efficient utilization of the resources which depends not only on the skills acquired through education but also on good and sound health.

The Nigerian government as well as non- governmental organisations have at various levels established a number of programmes and policies to develop and improve the education and health care systems in the country, knowing fully well that the level of productivities which depends largely on how resources are utilized efficiently can only be achieved when labour is equipped with essential and relevant skills. Despite the various efforts applied to the development of human capital through expenditure on education and health by the government and non- governmental organizations, resources are still inefficient in Nigeria and this contributed to problems of economic growth in Nigeria. Also, there has been the inability to effectively strategize on how to efficiently allocate resources to the health and education sector in order to enhance economic growth. The missing link in Nigeria however has been the inability of the country to ensure systematic, sustainable and strategic plan to make an enduring impact on human capital development for a sustainable economic growth that can lend ultimately to economic development.

Objectives of the Study

The main objective of this study is to examine human capital investment and the growth of the Nigerian economy (1980-2018). However, the specific objectives of this study will be:

1. To determine the correlation between human capital development and economic growth in Nigeria.
2. To examine the problems of human capital development in Nigeria
3. To highlight the effect of government expenditure in the health sector on economic growth
4. To understand the effect of government expenditure in education sector on economic growth

Research Questions

In the light of the problem therefore, this study seeks to proffer answers to the following questions:

1. Is there any impact of human capital development on economic growth in Nigeria?
2. What are the problems of human capital development in Nigeria?
3. Does the health sector have economic impact on human capital development?
4. Does the education sector have economic impact on human capital development?

Hypotheses of the Study

The following hypotheses were put forth for this study:

1. The government expenditure on health and education has no significant effect on economic growth in Nigeria.
2. The government expenditure on education and education has no significant effect on economic growth in Nigeria.
3. The effect of human capital development has no significant impact on economic growth in Nigeria.

Significance of the Study

This study will reveal the level of human capital investment in Nigeria, both in terms of the government financial outlays on education and health, and the actual resultant effect in terms of the actual school enrolment and the level of infant mortality rate as proxies for education and health respectively. It has been observed that investment in human capital contributes in numerous ways to the development of a general milieu favourable to economic progress. Apart from the extension of human capabilities, it is ascertained that there exist a significance relationship between human capital development and economic growth in Nigeria, then the study will be of immense benefit to the government especially to economic policy-makers in planning appropriate policy measures to undertake in order to further enhance the capacity and skills of human capital in Nigeria. In recognition of the above, this study intends to carry out a detailed study on the current state of the nation’s human resource development and will also serve as a reference material for research purposes on human capital investment and economic growth in Nigeria. So this study will be useful to policy makers, economists, health and education experts, students and other stakeholders.

Scope of the Study

The study to be embarked upon is to examine the relevance of human capital development in the process of achieving economic growth in Nigeria. The study will cover the period between 1980 and 2018. This period is selected because of the availability of data, and to really examine government expenditure on health and education in the current period.