Determinants of Human Capital Development: Policy Implication for Economic Growth in Nigeria

Abstract

Most theoretical studies like the endogenous growth theory have shown that countries and regions which invest heavily on human capital development should expect higher growth rates than areas with inferior levels. Understanding and addressing challenges related to human capital is thus fundamental to short term stability as well as the long term growth, prosperity and competitiveness of nations. Motivated by this understanding, the study explored simultaneously, several structural and institutional factors that may influence human capital development and its policy implication for economic growth in Nigeria. The Dynamic Ordinary Least Squares (DOLS) was adopted as analytical technique. The estimated DOLS results showed that the significant determinants of economic growth are largely from human capital development, public expenditure on health, infrastructures and democratic governance. The research therefore, suggested provision of sectoral policies, especially educational and health policies that are not only pro-people development, but create the income and welfare enhancing opportunities needed to boost human development. There is need for government to look for other stable sources of financing infrastructures in Nigeria because the reliance on crude oil revenue has brought about fluctuation in infrastructural development which has negative effect on economic growth. Good example of other sources of financing infrastructures is the recent sovereign Sukuk bond by the Federal government to raise funds through the non interest capital market. The Sukuk issue is targeted at infrastructure development and financial inclusion.