ASSESSING THE ROLE OF HUMAN CAPITAL DEVELOPMENT IN ECONOMIC GROWTH OF NIGERIA

Abstract

This study examines the role of human capital development in fostering economic growth in Nigeria, with a specific focus on the impacts of education and health investments, electricity access, and foreign aid. Motivated by Nigeria's ambition to transition to a knowledge-based economy, the study explores how investments in human capital and infrastructure contribute to sustained economic growth. The primary objective is to assess both the short-term and long-term effects of these investments using the Auto-Regressive Distributed Lag (ARDL) model. The methodology involves analysing time-series data to capture the dynamic relationships between human capital development, infrastructure, and economic growth. The scope of the study covers a period from 1980 to 2023, focusing on key variables such as education spending, healthcare expenditure, electricity access, and foreign aid. The theoretical framework draws on three key theories: Neo-Classical Economic Growth Theory, Human Capital Theory, and the Infrastructure-Augmented Solow Model. These theories collectively highlight how investments in human capital, infrastructure, and technological progress drive economic growth. The findings reveal that lagged increase in Growth Domestic Product (GDP) significantly influences current economic performance, while the effects of education and health investments are more long-term, with delayed returns. Additionally, the study highlights that electricity access and foreign aid have immediate impacts, while human capital investments require more time to generate visible results. Based on these insights, the study recommends that policymakers prioritise long-term strategies to enhance human capital and infrastructure development, while reconsidering the effectiveness of foreign aid in promoting sustainable economic growth in Nigeria.