HUMAN CAPITAL DEVELOPMENT AND THE ECONOMIC GROWTH IN NIGERIA.
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HUMAN CAPITAL DEVELOPMENT AND THE ECONOMIC GROWTH IN NIGERIA.
Chapter one
INTRODUCTION
1.1 Background of the Study.
Woodhall (2003) defines human capital as the reality that humans invest in themselves through education, training, or other activities, which increases their future income by increasing their lifetime earnings.
Economists use the term “investment” to refer to spending on assets that will generate income in the future, as opposed to consumption, which provides immediate gratification or advantages but does not generate future revenue.
Capital refers to assets that will create future income. Historically, economic study of investment and capital has focused on physical capital, such as machinery, equipment, or buildings, which will generate money in the future by increasing productive capacity.
However, a number of classical economists, most notably Adam Smith, argued that education helped to improve workers’ productive capacity in the same way that purchasing new machinery or other forms of physical capital increased the productive capacity of a factory or other firm. As a result, a comparison was established between investment in physical capital and human capital.
It is worth noting that since Theodore Schultz’s (1960s) time, the concept of human capital has dominated education economics and had a strong influence on labour market analysis, wage determination, and other branches of economics, such as the analysis of economic growth, health-care expenditure, and migration research.
For it is recognised that they are also investments in human capital because they can assist decide an individual’s earning capacity, hence increasing their lifetime income.
In view of the foregoing, human capital is seen as a crucial aspect in transforming all resources to humanity’s use and profit. Economists have recognised that the development and application of human capital is critical to a country’s economic prosperity. In any case, no country can achieve long-term economic growth without making significant investments in human capital.
Several studies have emerged to investigate the routes via which human capital can influence growth. According to previous research, human capital and economic growth have a complementary relationship. More research is required due to Nigeria’s development concerns.
Most obviously, much of Nigeria’s planning has been focused on the accumulation of physical capital for quick expansion and development, with insufficient emphasis paid to the critical function of human capital in the development process.
It is also worth noting that Nigeria is extremely rich in natural and human resources. The reservoir of resources from one end to the other is unquantifiable to the point where, with creative leadership, economic success could have been realised in the late twentieth century.
Despite these copious resources, Nigeria has struggled to realise its full development potential, with many countries and international organisations, such as the United Nations Development Programme, prioritising sustainable human capital development or people-oriented development.
Given this context, the purpose of this study is to investigate the relationship between human capital development and economic growth in Nigeria from 1980 to 2012, where data is available.
1.2 Statement of Problem
The high prevalence of illiteracy in Nigeria has resulted in a substantial number of unskilled workers who use outdated capital, equipment, and manufacturing methods (Adelakun, 2011). As a result, their marginal productivity is exceedingly low, resulting in low real income, poor savings, low investment, and thus a low rate of capital formation.
The Human Development Index (2010) publication said that adult literacy rates of at least 65% would be achieved by 2015. As a result, the strategy aimed to empower citizens to gain the skills and knowledge necessary to face the great challenges ahead.
Over time, the following issues regarding the notion have remained unanswered. Uneven distribution of trained labour, misemployment of human capital in Nigeria, and a poor compensation system that impedes human capital acquisition and growth.
Given this context, this study examines the relationship between human capital development and economic development from 1980 to 2010.
1.3 Objectives of the Study:
The overall goal of this research is to investigate the relationship between human capital development and economic growth in Nigeria from 1980 to 2012. However, the precise aims are as follows:
1. Investigate the causal link between human capital development and economic growth.
2. Determine the rate of human capital formation in Nigeria.
3. Investigate the distribution of skilled labour and human capital in Nigeria.
4. Investigate the relative size and trends in human capital development in Nigeria.
1.4 Research Question or Hypothesis
1. To what extent are the economy and human capital development favourably associated, especially in the context of a growing economy like Nigeria?
2. What is the rate of human capital development in Nigeria?
3. What is the distribution of skilled labour? Human capital is underemployed in Nigeria.
4. What is the relative magnitude and pattern of human capital development in Nigeria?
The proposed research study empirically explores the null hypothesis that human capital development has no substantial impact on Nigeria’s economic growth.
1.5 Justification and Significance of the Study
The current study has implications for improving and raising the quality and quantity of workforce required in the country to address the challenges of growth and development.
The study highlighted human capital as a key aspect in turning all resources to people’s use and benefit, documenting the current investment in human capital development in Nigeria’s economic growth.
This study is truly relevant in the sense that it will aid in determining how to accelerate the growth rate of national income. As a result, the study will be useful to the government and policymakers in developing human capital development policies, directives, and laws to help Nigeria’s economy flourish.
1.6 Organisation of the Study
This research study is divided into five sections. Section one contains the introduction, which includes the study’s background, statement of the problem, study objectives, research questions hypothesis, justification / significance of the study, and study organisation.
Section two includes a theoretical review, a review of current literature, and a methodological review, while section three focuses on research methodology, including the theoretical framework, methodology, research design, model specification, estimation technique, and data sources;
and section four is data presentation and analysis, with a focus on discussion of results/findings. Section five includes the summary of findings, conclusion, and policy recommendations.
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