Government Expenditure and Human Capital Development in Nigeria

Abstract

Despite consistent improvement in government budgetary allocation and spending on health and education sectors in Nigeria, the country human capital development index stilled remained at its ebbs compared to other countries. This study empirically examined the impact of government expenditures and human capital development in Nigeria, spanning from 1981 – 2019. Government expenditure is proxied by education and health while human capital development is proxied by human Development index. Secondary data was obtained from the Central Bank of Nigeria Statistical Bulletin, various issues. The study employed autoregressive distributed lag techniques of analysis. Findings revealed that government education expenditure had significant impact on human capital development both in the short-run and long run. Moreover, empirical evidence further revealed that, it was only in the long run that health expenditure delivered a steady positive effect on human capital development. Cumulatively, expenditure on health and education improved human capital development by at most 16 percent in the long run. Thus, the researcher recommends amongst others; a composite consideration in budgetary allocation and implementation of expenditure on human capital development. This has the tendency of allowing the effect of any expenditure on human capital development to be seen and felt.