ABSTRACT
Overview: The effect of government expenditures on human capital development has been acknowledged both in industrialized and emerging economies. Specifically, government expenditures can be regarded as strategic avenues for achieving strategic economic objectives of a nation through the human capital development. However, in the context of Nigeria, the poor budgetary allocation to the education and health sector has depressed the efficacy of education and trainings and health outcomes, which serve as engine of human capital development. This phenomenon has added to several challenges such as low educational outputs which in turn translate into half-baked as well as ill-prepared graduates leading to the incidence of felons and malefactors who exert depressing impacts on the nation’s economy.
Objective and Methodology: this study thus investigated the Effect of Government Expenditure on Human capital Development in Nigeria for the period1990 to 2019, using annual data set extracted from the United Nations Development Programme (Human development index), Central Bank of Nigeria Statistical Bulletin (Government Expenditures on Education, Government Expenditure on Health and Gross fixed capital formation) as well as Transparency International (Corruption Perceptions Index). Also, the method of analysis adopted in the study is the autoregressive distributed lag (ARDL) and bounds testing approach.
Results: The coefficient of total government expenditure on education was positive and statistically significant at 1% critical level both in the short run and long run estimation results. Similarly, the coefficient of total government expenditure on health was positive and statistically insignificant both in the short run and long run estimation results in the period of assessment. Furthermore, the coefficient of gross fixed capital formation was positive both in the short run and long run estimation results in the period of assessment. The result further established that while GFCF was statistically significant at 5% critical level in the short run, it became statistically significant at 1% critical level in the long run. Also, the coefficient of corruption perceptions index and its associated one-period lag were positive both in the short run and long run estimation results in the period of assessment. The result further established that while the coefficient of corruption perceptions index was statistically insignificant in the short run, its associated one-period lag became statistically significant at 1% critical level in the short run. Similarly, the coefficient of corruption perceptions index was found to be statistically significant at 1% critical level in the long run.
Recommendations: Given the statistically significant positive relationship between total government expenditure on education in influencing human capital development in Nigeria, it was recommended that the country to adopt an expansionary fiscal measure that will help reposition the country’s education sector through enhanced budgetary allocations to the sector. To offset the inadequacy in public health investments, the study recommends that the government should partner with the private sector through the mechanism of public-private partnership to boost investments in health sector infrastructure by availing adequate funds needed to build more health centers/institutions that meet global standard and well-equipped to meet the daily demand of patents, citing the growing health and social care needs across the globe.It was also recommended that the government should provide enabling environment for investments to thrive especially through encouragement of private investors who will be more willing to commit their investible resources to the health and education sectors to boost both education and health outcomes in the country as this is hoped to boost human capital development in Nigeria.
