AN EMPIRICAL ANALYSIS OF HUMAN CAPITAL INVESTMENT AND ECONOMIC GROWTH IN NIGERIA.

ABSTRACT
This paper analyses the relationship between investment in human capital and economic growth in Nigeria. Annual growth rates from 1981 to 2017 are used as the variables in the model. Unit root tests demonstrate that all the variables tested were non-stationary in levels, co-integration was then performed and the test for granger causality was undertaken using a Vector Error Correction Mechanism. These tests demonstrate that unidirectional causality exists, running from GDP to education and health expenditures in both the short run and the long run. Given these results, it is recommended that the Government of Nigeria increase its budgetary allocation to both the education and health sectors. In particular, more government spending should be devoted to capital expenditure on education and health in order to develop modern learning and health facilities. In addition, government should devote more money to reducing the burden of communicable diseases such as HIV, malaria and tuberculosis. This type of investment will improve the quality of life and health status of Nigeria’s population.

STATEMENT OF THE PROBLEM
The financing of an empirical analysis of human capital investment and economic growth in Nigeria has often been described as inadequate with budgetary allocations to these sectors (especially health and education) hardly exceeding, on average 4% of the nation’s total budgetary provisions (Orubuloye and Oni, 2013; Riman and Apkan, 2013). For instance, the education and health care spending in Nigeria is segmented into private and public spending. While public health expenditures in Nigeria account for just 20-30% of total health expenditures, private expenditures on health account for 70-80% of total health expenditure. It is expected that budgetary allocations to health sector would improve health outcome and reduce all kinds of mortality rate. Ichoku, and Fonta, (2016) observed that increased budgetary allocation to health has assisted some heavily-indebted poor countries to fight poverty, and raise the living standard of people in these countries. Remarkably, the federal budgetary component of health expenditure has increased over the years. It increased from 1.7% in 1991 to 7.2% in 2007(WHO, 2012; NHS, 2013). Nevertheless, the budgetary allocation for health is still below the 15% signed by the Nigerian government in the Abuja declaration (WHO, 2016). Given this level of government spending, it will be very difficult to provide the essential health care services, and with the unpredictable change of the oil prices in the world market and low tax base, health care will always be at the peril of underfunding by the Nigerian government. Low level of life expectancy is explained by inadequate finances meant for health sector in Nigeria. This is blamed on uneven distribution of finance and facilities, especially in the primary health care. The allocation to education sector is not different from that of health. It is pertinent to note also that the budgetary allocation to the education sector reduced to 8.7 and 7 per cent in 2010 and 2011 respectively and 8.5 in 2012 (Akpan, 2013). Education expenditure as a ratio of total government expenditure between 2013 and 2014 averages 6.97% and varies from 2.22% to14.30%. This fell below the minimum standard of 26% of annual budget prescribed by the United Nations Scientific and Cultural Organization. The emerging trend shows that education expenditure as a ratio of GDP follows the same trend. It ranges from 0.39% to 7.86% with a mean of 1.62% (Dauda, 2013).

1.3 OBJECTIVES OF THE STUDY
The broad objective of the study is to examine the impact of development in an empirical analysis of human capital investment and economic growth in Nigeria. The specific objectives are to;
• Ascertain the relationship between public expenditure on education and economic growth in Nigeria.
• Ascertain the relationship between public expenditure on health and economic growth in Nigeria.
• Examine the impact of capital formation on economic growth in Nigeria.
• Proffer policy recommendations to combat the inadequacies in the Nigerian health and education sectors