Human Capital Investment and Economic Development in Nigeria

Abstract

This study investigates the relationship between human capital investment and economic development in Nigeria from 1990 to 2024, using recurrent expenditures on education, health, research and development, and social services as proxies for human capital investment. Economic development is measured by real GDP per capita growth. Data were sourced from the World Bank, UNDP, and the Central Bank of Nigeria Statistical Bulletin. The study employs descriptive statistics, ADF unit root tests, ARDL bounds cointegration, ARDL estimation, and diagnostic tests. Findings reveal the existence of a long-run relationship among the dependent and independent variables. The ARDL estimates show that education, health, and research and development expenditures exhibit no statistically significant effects on real GDP per capita growth, while social services expenditure exerts a statistically significant positive effect on real GDP per capita growth. The error correction results indicate moderate speeds of adjustment toward long-run equilibrium. The study concludes that human capital investment remains an important driver of economic development in Nigeria, although the effectiveness of such investments depends largely on the efficient allocation, management, and utilization of public resources. Based on these findings, the researcher recommends among others that the government should reform the research and development sector by promoting innovation partnerships between universities, industries, and research institutions. Incentives such as grants, tax reliefs, and innovation hubs would help transform R&D investment into productivity growth.