ECONOMIC DIVERSIFICATION, HUMAN CAPITAL DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT

Economic diversification and human capital development has been the glamour of successive administration in Nigeria, especially amidst the dwindling oil-revenue in recent years, this study aims at investigating the impact of diversifying the economic and improving human capital development on economic growth in Nigeria using annual time series data for the period 1981 – 2021. The main objective of this research work is to evaluate the impact of economic diversification and human development on economic growth and the nature of relationship that exists between economic diversification, human capital development and economic growth. An endogenous growth model is employed for the study with emphases on how non-oil gross domestic product, non-oil export, agricultural productivity, manufacturing industry productivity, government expenditure on education, government expenditure on health affect economic growth in Nigeria. The variables considered are GDP growth rate, a proxy for economic growth and dependent variable. Non-oil gross domestic product, non-oil export, agricultural productivity, manufacturing industry productivity, government expenditure on education, government expenditure on health as independent variable. Augmented Dickey-fuller (ADF) test was used to test for the stationarity of the variables and they were found to be stationary at first difference. Then Johansen co-integration technique was used to establish if the stationary variables are co-integrated in the long run. Further, ECM is employed to correct any form of disequilibrium in the short run. The result of stationarity test reveals that the model is well specified and could be used for policy analysis. The analysis was based on data extracted from Central Bank of Nigeria (CBN) statistical bulletin and World Development Indicators (WDI). The result of the analysis shows that variables such as non-oil gross domestic product and agricultural productivity are statistically significant at 5% level, while government expenditure on education is seen to be positively related to GDP but not significant in its determination. The study based on the findings suggests that the government should increase capital investment in the education sector and also improve the level of technology so as to increase agricultural sector productivity.