Government Expenditure on Human Capital and Economic Growth in Nigeria

Abstract

This paper examines the effect of government expenditure on human capital on
economic growth in Nigeria between 1981 and 2015 using Mankiw, Romer and
Weil (1992) model and Autoregressive Distributed Lag (ARDL) technique. Data
on government expenditure in education, health and other social services were
sourced from the Central Bank Statistical Bulletin (CBN, 2015) while data on
economic growth, proxy by growth in GDP and labour, proxy by labour force
were obtained from World Bank Development Indicators (WDI, 2015). The result
of the analysis revealed that government expenditure on education and other
social services have a positive but insignificant effect on economic growth while
expenditure on health has a negative but insignificant effect on economic growth
both in the short and long run within the study period. The study therefore
recommends the government to implement an appropriate policy to ensure proper
management and efficient allocation of funds to education, health and other
social service sectors in the country. In addition, education, health and other
social sectors should be upgraded to prevent citizens from migrating to other
countries for better preferences.