Economic Planning and Human Capital Development in Nigeria

Abstract

This study provides econometrics evidence linking economic planning process to human capital development in Nigeria. The specific objectives focused on the effects of planned investments on education, healthcare delivery and community and social services on human capital development in Nigeria over the period 1990-2016. Data collected from Central Bank of Nigeria Statistical Bulletin were analyzed using Fully Modified Least Squares and Granger Causality test in addition to augmented Dickey Fuller unit root and Johansen-Juselius test. The results of the unit root tests show that only life expectancy is stationary at levels while the other variables in the model become stationary at first difference. The cointegration tests results revealed that the variables in each of the models have long run relationship. The regression result in shows that planned expenditure on education has weak significant positive impact on life expectancy. This finding aligns with the theoretical expectation as economic planning that increases budgetary allocation to the education sector is expected to increase the level human capital of the population and in turn increase their opportunities of living a long and healthy life. The results further show that public investment in the education sector generates positive outcomes on gender parity index for gross enrollment ratio in primary and secondary education in Nigeria. The Granger causality test shows that unidirectional causality runs from public expenditure on social and community services to life expectancy and from public expenditure on education to gender parity index for gross enrollment ratio in primary and secondary education. Therefore, it is recommended that policy makers should ensure that economic planning in Nigeria continues to prioritize medium and long term investments on education in addition to community and social services in order to enhance pace of human development.