IMPACT OF HUMAN CAPITAL DEVELOPMENT ON MANUFACTURING OUTPUT IN NIGERIA

ABSTRACT

This study empirically examined the impact of human capital development on manufacturing output in Nigeria from 1981-2018. Being a time series data from CBN and WDI, to avoid spurious regression result in our model, the first point of call was to test for stationary of the data by using Augmented Dickey-Fuller unit root test. Then Johansen co-integration technique was used to establish if the stationary variables are co-integrated in the long-run. Further, ECM was employed to correct for any form of dis-equilibrium in the short run. The result of stability and normality test reveals that the model is stable at 5percent and the residuals are normally distributed, hence the model could be used for policy analysis. The model specified manufacturing output measured by manufacturing value added as dependent variable on human capital development proxy by life expectancy, government expenditures on health and education. Empirical investigations reveal that all the variables were not significant at levels while some of them were stationary at first difference and one of the variable(LEXP) was stationary at second difference, however, all the variables were taken to their second difference. It was found that government expenditure on health (GEXH) exerts a positive influence on manufacturing value added while life expectancy (LEXP) and government education on education (GEXE) were found to be negatively related to growth of manufacturing output in Nigeria. The study therefore recommend that the government should design appropriate strategic educational and health policies capable of achieving sustainable human capital development through education, training and re-training in order to inculcate in human resource the desired skills, knowledge, and attitudes needed to stimulate manufacturing value added in Nigeria vis-à-vis to raise the productive base of the economy and thus raise GDP.

Keywords: manufacturing value added, LEXP, GEXE, and GEXH.