CHAPTER ONE

INTRODUCTION

1.1       Background to Study

Human capital as explained by Schutz (1993) is the key element in improving firms’ asset and employees in order to improve productivity as well as sustain competitive advantage. Human capital becomes a tool for competitive advantage since it involves the process of training, knowledge acquisition (education), initiatives and so on, all these are geared towards skills acquisition. Human capital development is human centered because its major concern is on human empowerment which would lead to active participation. According to Organization for Economic Corporation and Development (OECD,2001), human capital is concerned with knowledge, skills competitiveness and attributes embedded in an individual that facilitates the creation of personal, social and economic wellbeing. In order to achieve positive economic development in Nigeria, human capital development should be considered as an integral and important factor for economic development. A major challenge facing the global community and Nigeria at large is how to achieve sustainable development. The three pillars of sustainable development cannot be achieved if human capital development doesn’t come to play as an integral part. In Nigeria, the annual federal government budget to educational sector (in percentages) is nothing to talk about, statistics show that the percentages over the years are not in line with the United Nations Educational Scientific and Cultural Organization’s (UNESCO) recommendation of 26.0% it was discovered that from 2005-2007,the percentage was 6.3%, 7.8%, 8.7% respectively. A poor country is a country, which never invested sufficiently in its human capital development and the citizens who are supposed to be at the heart of the economic development would be poverty stricken.

Human capital development is seen as a focal point for pivoting economic development, for reducing the level of unemployment and increasing the supply of entrepreneurs in any economy. However, the effect of human capital on sustainable economic development in Nigeria has not been adequately explored. In view of various policies adopted by successive governments to advance development in Nigeria, the study examined the effect human capital development has had on economic development in the light of various factors that could have shaped economic performance. In addition, the different educational enrollment rates were examined to find out if any significant positive impact will be felt in the economic sector. Time series data covering the period between 1980 and 2015 were used with an appropriate econometric technique. It was discovered that human capital has to a large extent impacted on economic development but in terms of output generated economically, the effect of human capital remains low in Nigeria.

Health and education are both components of human capital and contributors to human welfare. One index of human welfare, which incorporates income, education and health, shows that Nigeria level of ‘human development’ is one of the lowest in the world. Sound education and good health are basic objectives of development, they are important ends themselves. Health is central to well-being and Education is essential for a satisfying and rewarding life, both are fundamental to broader notion of expanded human capabilities that lies at end of the meaning of development (Todaro and Smith, 2011).

No country has achieved a sustained economic development without a substantial investment in human capital. Poor countries have considerable discretion over how much to invest in health and education. Since Independence, Africa has achieved a rapid growth of some aspects of human capital particularly in the expansion of education despite starting from a low level of income. The expansion of the human capital stock has not been matched by a commensurate rise in physical capital. The result has been low growth of incomes and low returns to the educational investment.

This work provides an overview of Human capital development, economic development and welfare which are closely interrelated. Also it provides an assessment of Nigeria’s human development in the context of other developing countries. The development of human capital has been recognized by economists to be key prerequisite for a country’s socio-economic and political transformation. Therefore human capital is considered to be the most valuable asset and needs to be mobilized, developed, and empowered to ensure rapid economic development.

1.2       Statement of the Problem

Nigeria is a developing country and as the name “developing” implies she ought to have a positive increase in both economic development and the general socio-economic situations. But this is mostly not the case due to corruption, misappropriation of funds, and wrong implementation of economic policies; and mostly due to lack of policies that aids Human capital development.

            Over the years conscious effort made through budgetary allocation for the development of human capital through the expenditures on health and education which is supposed to bolster/drive towards economic development which should be seen in human development index that consist of per capita income, literacy rate and life expectancy.

            Due to lack of value added in the production process and the demand for foreign products for consumption and further production, the level of importation has increased far over exportation thereby leading to the overdependence of the Nigerian economy on foreign exporting countries. It is quite agreeable that Human capital development is a prerequisite for a developing economy because it aids in increasing the efficiency of the labour force and consequently increasing its competitiveness amongst other developing or developed economies.

            Ejere (2011) is of the view that “a country’s competitiveness in the New International Economic Order (NIEO) is strongly connected to the quality of human capital. Hence, human capital formation is undoubtedly the pivot for any meaningful program of socio-economic development in Nigeria and indeed any country”.

It is clear from the above paragraph that human capital development is highly required for a meaningful and sustainable economic development. Human capital development through spending on education and health is supposed to drive/lead to an improvement in economic development as there is a direct positive relationship between human capital development and economic development though this has not been the case in Nigeria over the years as an investment in human capital (education and health) does not have the same effect on economic development. On this note this work seeks to access the relationship between human capital development and economic development.

1.3       Objectives of the Study

            The broad objective of this work was to evaluate the relationship between human capital development and economic development in Nigeria between(1981-2015); In order to justify further the critical importance given to the development of human capital in Nigeria, The specific objectives are:

a.       To estimate the relationship between human capital development (through education and health) and economic development.

1.4       Research Questions

This work seeks to answer the following questions.

1.      What is the relationship between human capital development (through education and health) and economic development in Nigeria?

1. 5

You either get what you want or your money back. T&C Apply

Talk to us right now: (+234)906-451-7926 (Call/WhatsApp)

---