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This study, “EXAMINATION OF THE RELATIONSHIP BETWEEN HUMAN CAPITALS AND ECONOMIC GROWTH IN NIGERIA” contains concise information that will serve as a framework or guide for your project work. The project study is well-researched for academic purposes and are usually provided in complete chapters with adequate References.






1.1      Background of the Study

In  the  past,  Human  Capital  Development  (HCD)  was  not  seen  as  a development  issue  partly  because  it  was  viewed  as  given  in  the industrialized  economies.  However,  when  all  efforts  at  development  failed usefully  in  the  less  development  economies,  especially  Nigeria  as  a  case study  renewed  attention  was  paid  to  the  role  of   human  (and social) capital  in  the  development  process  and  not  only  attribute  to  natural Capital endowment.

Human  Capital  development  tends  to  improve  the  quality  and productivity  of  labour  which  in  turn,  leads  to  economic  growth.  Sadly enough,  development  planners  have  failed  to  make  investment  in  HRD  a central  focus  of  development  strategies. The  reason  it  is  sometimes  argued, is  the  difficulty  involved  in  distinguishing  between  what  part  of HRD  represent  an  investment  and  what  part  represent  consumption  ( Da Silva 1997 and Oshina 1986).

It  is  now  largely  and  generally  accepted  that  investment  in  human Capitals  promotes  economic  growth.  However, a  country’s  economics capacity  also  determines  its  ability  to  invest  in  human  Capitals, so  that  a good  educational  system  may be  the  flower  of  economic  development , but it  is  also  the  seed.  Besides  acting  as  an  important  vehicle  of  achieving equitable  income  distribution,  human  Capital  development  is also  a  potent  means  of  addressing  the  problem  of  poverty.  In the  words  of Harrison (1973:3):

Human  Capital  constitutes  the  ultimate  basis  for  the  wealth  of  a  nation’s  capital.  Capitals  are  passive  factor  of  production;  human  beings are  the  actives  agent  who  accumulate  capital,  exploit  natural  Capitals, and  build  social,  economic  and  political  organization.  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.

Economist  had  long  realized  the  importance  of human  Capital development  in  the  development  process. For  instance,  the  emphasis  on the  importance  of  education  at  various  levels  in  the  wealth  of  nation, Adams  Smith (1937)  specifically  includes  the  acquired  and  useful  ability of  all  inhabitants  or   members  of  the  society  in  his  concept  of  fixed capital.  Alfred  Marshal (1930)  also  emphasized  the  importance  of education  as  a national  investment  and  in  his  view  the  most  valuable  of all  capital  is  that  invested  in  human  being.  In  spite  of  the  scholarly discovery  of  the  importance  of  human  Capitals ,  a  more  recent  effort was  tutored  to  invest  in  education  as  a  panacea  for  economic advancement  and  improvement.  The  United  Nation  Economics  Commission  for  Africa  (UNECA)  (1990)  describe  human  Capitals  as  the knowledge,  skills,  altitudes,  physical  and  management  effort  required  to manipulate  capital,  technology,  and  land  among  other  things,  to  produce goods  and  services  for  human  consumption   In  other  words,  Human Capital  development  can  therefore  be  conceived  as  the  process  of developing  the  skill,  knowledge  and  the  capabilities  of  all  the  people  of the  society  which  are  needed  in  the  labour  market  for  the  production  of goods  and  services.  In  economics  terms,  it could  be  described  as  the accumulation  of  human  capital  and  its  effectiveness  in  the  development  of  an  economy  (Harrison and Mayers,1964).  On  the  Nigeria  scene, Professor  Frederick  Harbison  introduced  the  concept  of  investment  in human  capital –  his  contribution  as  the  manpower  consultant  to  the  famous  Ashby  Commission  (1960).  The  commission  report  titled Investment  in  Education  was  published  in  1960  and  for  the  first  in  the history  of  education  development  efforts.  It  is  interesting  to  note  that Nigeria  was  one  of  the  first  developing  country  to  embrace  the  concept of  human  capital  formation.

The  purpose  of  this  study  is  to  investigate  the  impact  of  Human  Capital  Development  (HRD)  on  economic  growth  in  Nigeria  as  well  as compare  and  contrast  the  past  and  present  government  policies  towards educational  improvement  and  the  rationale  for  quality  education  as  a determinant  of  economic  growth  in  most  developing  economies  and  ways of  attaining  Millennium  Development  Goals  (MDGs)  by  2020  in  the  host country,  Nigeria.

Technically  advanced  human  Capitals  and  a  growing  knowledge  base  appear to be part of this well spring of growth. An implication of Lucas’ hypothesis on  human  Capitals  is  thus  associated  with  investment  in  man  and  his  development  as  creative  and  productive  Capitals  (Harbison,1962).

As  the  global  economy  shifts  towards  more  knowledge-based  sectors  (e.g. the manufacture  of  devices,  pharmaceuticals, telecommunications  and  other  ICT based services),  skills  and  human  Capitals  development  becomes  a  central issue  for  policy  makers  and  practitioners  engaged  in  economic  development both  at  the  national  and  regional  level (OECD,1996);  yet  the  impact of education  and  vocational  training  activities  exert  up on  changing  national  and regional  economies  remain  less  than  thoroughly  explained  and  analyzed. Since  the  introduction  of  human  Capitals  theory  in  the  1960s,  a  number  of studies  have  attempted  to  address  this  and  related  issues. Today,  the  global economy  is  divided  into  two  parts  comprising  of  a  few  rich  nations  regarded  as  the  developed  countries  (DCs)  and  many  poor  nations  regarded as  the  less developed countries (LDCs). DCs are characterized by high productivity   while the LDCs are characterized by  low  productivity. According to  the  level  of  human  Capitals  development  and  per  capita  income, Nigeria is  classified under  the  LDCs.

Nigeria  as  a country is  immensely  endowed  both  in  natural  and  human Capitals.  The  pool  of  Capitals  from  one  end  to  the  other  is  unquantifiable to  such  extent  that,  given  a  dynamic  leadership,  economic  prosperity  would have  been  achieved  in  late  20th  century.  The  primary  focus  of  Nigeria  has been  finding  a  way to  accelerate  the  growth  rate  of  national  income  and  to engage  in  structural  transformation  of  her  subsistence  and  Capital  based economy  to  a  production  and  consumption  based  economy  in  order  to  break the cycle  of  poverty,  low  productivity  and  stagnation.

In  spite  of  all  these  abundant  Capitals,  Nigeria  has  failed  to  realize  her  full  development  potential  with the  topmost  priority currently given to sustainable  human  Capitals  development  or  people  oriented  development  by many  countries  and  multilateral  organizations,  e.g.  UNDP.  A  review  of  the Nigerian  economy  has  become  quite  appropriate  as  a  way  of  understanding more  comprehensively  her  human  Capitals  development.

Human  Capitals  refers  to  the  abilities  and  skills  of  human  Capitals  and human  Capitals  development  refers  to  the  process  of  acquiring  and increasing  the  number  of   persons  who  have the skills, education  and experience which are critical for the economic growth of  the country ( Harbison, 1962).  Therefore, what really matters in   Nigeria is  the empowerment of people and the mobilization of economic surplus into productive investment channels. There is also the need for the Nigerian economy to eliminate or minimize those constraints towards human Capitals development so as to enhance rapid economic growth.

Human Capitals refers to the abilities and skills of human Capitals and human Capitals development refers to the process of acquiring and increasing the number of   persons  who  have the  skills, education and experience which are critical for the economic growth of  the country ( Harbison,1962). Therefore, what really matters in Nigeria is the empowerment of people and the mobilization of economic surplus into productive investment channels. There is also the need for the Nigerian economy to eliminate or minimize those constraints towards human Capitals development so as to enhance rapid economic growth.

1.2       Statement of the Problem

The  concept  of  human  capital  formation  refers  to  a  conscious  and continuous  process  of  acquiring  requisite  knowledge, education,  skill and  experience  that  are  crucial  for  the  rapid  economic  growth  of  a country  (Harbison 1973; Salleh 1992). The  importance  of  human capital has  been  emphasized  in  the  world  Bank  report  on  Sub-Saharan  African (1989)  which  calls  for  a  doubling  of  public expenditure on human  Capitals  development  from 4-5 percent  of  GDP  in  1985  to  8-10 percent  by  years  2000 (world Bank 1989;Okojie 1995).

Therefore,  the  research  work  was  necessitated  to  address  the  problem  of inadequate  funding  of  the  educational  system  in  Nigeria,  as  confirmed  in the  work  of  Central  Bank  of  Nigeria  (2000). In  term  of  the  extent  of very  low  budget  allocations  to  education  as  compared  to  others. Furthermore, that  the  federal  government  allocation  to  education  ranged between  0.6  and  9.0  percent  for  recurrent  and  1.0  to  2.8  percent  for capital  expenditure  of  the  federal  Government  budget  for  the  period  of 1992  – 1996. Thus,  the   government  of  Nigeria  in  the  NEEDS  programme recognize  that  one  of  the  main  Challenge  facing  the  educational  institution  in  the  country  was  inadequate  funding. Another  problem  that  this  study  addresses  is  the  problem  of  poor infrastructure  for  learning  in  most  institutions, which  has  adversely  affected  the  role  of  education  in  economic growth. The  tremendous increase  in  enrolment  at  all  levels  of  education  and  training  have  been affected  because  of  poor  and  declining  quality  of  the  trained  manpower concerned  without  geometric  increase  in  the  public  expenditure  of  most developing  countries  towards  the   actualization  of  the  Millennium Development  Goals. (Yesufu 2000; 344)

1.3       Objectives of the Study

The broad objective of this research is to critically examine the impact of human Capital development on the economic growth in Nigeria.

1.4       Specific Objectives of the Study Include:

To  examine  the  importance  of  channeling  more  financial Capitals  into human  capital formation.

To  evaluate  and  access  the  trends  of  federal  Government  allocation  to  both  Capital         and   recurrent   expenditure  on  education system.

To   empirically   measure   the   linkage   between   Human   Capital Formation and economic  growth,   especially  among  developing  countries

To  identify  the  salient  role  of  human  capital  development  toward  the Millennium Development  Goals (MDGs) by 2020.

1.5       Scope of the study

The study will cover the impact of human Capital development on the economic growth in Nigeria from 1993-2013. It shall cover a period of 20 years.

1.6   Hypotheses of the Study                                                                                                                   

Given  the  aforementioned  bi-directional  nexus  between  Human  Capital development  and  economic  growth  in  the literature  of  the  World  War  II  and International  Labour  Organization  (ILO)  respectively.

The  following  hypothesis  formulated  and  tested  for  this  research  work  as:                                                                                                              H0:       Human  Capitals  development  does  not  have  an impact  on  economic growth  in          Nigeria.

H1:      Human  Capitals  development  does  have  an  impact  on  economic  growth  in  Nigeria.

1.7       Justification of Study

The study of this nature is prompted by the slow rate of Nigeria’s economic growth despite the huge contribution of the government in the economy. Researches on this topic being carried out over the years have not really achieved its prior objective. The effect of human Capitals development on economic growth holds a lot of benefits to our overall economic progress. The government and its agencies will find this work Capitalful in policy, directives and regulations for human Capitals development to aid economic growth.

1.8   Research Questions

The  following  questions  were  considered  in  the  course  of  this  study;

  • To  what  extent  does  human  Capitals  affect  the  Economic  Growth?
  • How  can  the  effect  of  human  Capitals  on a  child  education  be  minimized?
  • To what   level   does   human   Capitals   affect   Human   Capital?
  • Does human   Capitals   development   affect   children   academic performance?

1.9       Methods of Data Collection

The study will employ secondary source of data collection method such as journals and publication of Central Bank of Nigeria (CBN), Federal Office of Statistic (FOS) now National Bureau of statistic (NBS), World Bank, Nigeria Institute of Social and Economic Research (NISER), Economic and financial review of Central Bank of Nigeria.

1.10     Method of Data Analysis

Most similar studies cited in literature had their methodology anchored on economics and econometrics, i.e. formulation of economic models and utilizing regression analysis to establish  how various variables in the model impact on the subject of study, hence, the study employed the use of ORDINARY LEAST SQUARE (OLS) method of estimation with data set from 1993-2013 to test the empirical relationship existing between Human Capitals Development and Economic Growth.

1.11     Definition of Terms

In  other  to  help  reader  understand  and  appreciate  this  study,  it  is  necessary to  define  some  relevant  terms  and  those  that  will  occur  frequently  in  the presentation  of  this  essay.

The terminologies are as follows:

Impact:  to   have   an   effect on, influence, alter.

Human Capitals: is  the  set  of  individuals  who  make up  the  workforce  of  an  organization  business  sector, or economy.

Development:  the   process of gradually becoming bigger, better, stronger, or more advanced.

Economic growth: is  the  increase  in  the  market  value  of  the  goods and  services  produced  by  an  economy  over time.

Education: the  act  or  process  of  imparting  or  acquiring  general knowledge,  developing  the  power  reasoning  and  judgment  and generally  preparing  oneself  or  others  intellectually  for  mature  life. It  is also  the  act  or  process  of  imparting  or  acquiring  particular  knowledge or  skills  as for  profession. We can also define as a degree, level or kind of schooling.







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