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Role of Human Capital in Economic Development: an Empirical Study of Nigerian Case

By | September 2011
Page 1 of 23
ROLE OF HUMAN CAPITAL IN ECONOMIC DEVELOPMENT: AN EMPIRICAL STUDY OF NIGERIAN CASE

By

Risikat Oladoyin S. Dauda, Ph.D

Department of Economics

University of Lagos
Akoka, Lagos
E-mail: rissydauda@yahoo.com
rdauda@unilag.edu.ng

ABSTRACT

Although several theories of endogenous growth point towards a positive effect of human capital on growth, empirical evidence on this issue has been mixed. Despite various efforts of the successive Nigerian governments, virtually all indices of human development especially those of health and education are embarrassingly low. These indices include infant and maternal mortality rates, life expectancy at birth, population per physician, adult literacy rate, gross primary and secondary enrolment ratio. In the same vein, the level of resource commitments to health and education compare very unfavourably with the situation in other developing countries. Using the human capital model of endogenous growth developed by Mankiw, Romer and Weil (1992), this paper examines empirically the role of human capital in Nigeria’s economic development. The paper employed a variety of analytical tools, including unit root tests, cointegration tests and error correction mechanism (ECM). 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...
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