THE IMPACT OF GOVERNMENT EXPENDITURE ON HUMAN CAPITAL DEVELOPMENT IN NIGERIA (1981-2019)

Abstract

This research analysis the impact of government expenditure on human capital development and also gives an insight on how human capital development, via this route, effect economic growth. This time series analysis covers a time period of 1981-2019. The study makes use of the Auto Regressive Distributed Lag model (ARDL) in estimating the long run and short run effects og government expenditure on education, government expenditure on health and human capital development on economic growth and development. The study made use of the bounds test approach to cointegration to estimate long run relationship between concerned variables and the Error Correction Model (ECM) to estimate short run relationship among relevant variables employed in this study, some of which are growth rate of Secondary School Enrollment Rate, growth rate in Life Expectancy Index, growth rate in Real GDP, Real Income per Capita and growth rate in Human Capital Index among others. The associated speed of correction of short run shocks into long run equilibrium was also significant in making conclusive inferences in this analysis. This study discovered a negative and insignificant effect of government expenditure on health and education sectors in human capital development and inferred a positive and insignificant effect of human capital development via government expenditure on economic growth. This study recommends a more strategic allocation of funds across concerned sectors and a systematic review on the method of operation in the health sector amongst others.