Assessing the Effect of Human Capital Financing on Nigeria’s Economic Growth: A Time Series Approach
Abstract
The paper focuses on the effects of human capital funding on economic growth in Nigeria and the time frame of 2000-2024. In particular, it examines the contribution of education, health, defence expenditure, fixed capital formation and labor to gross domestic product (GDP). The Augmented Dickey-Fuller (ADF) unit root test, Johansen cointegration method and the Vector Error Correction Model (VECM) were used to analyze time series data to determine both the long-run and short-run dynamics. According to the unit root outcomes, all the variables are all I(1), indicating an absence of order two, I(2) integration and the Johansen cointegration test indicates that three long-run relationships exist between the variables. The VECM findings show that health expenditure positively and significantly influences economic growth in the long-run but education, defence, and labor have negative or weak implications which indicate inefficiencies in the use of human capital. The error correction term is negative but large, which means that there is a slow movement towards the long-run equilibrium. The results substantiate Human Capital Theory and Endogenous Growth Theory, which highlights the significance of human capital investment in the long-run economic growth. The paper concludes that human capital investment is critical to the growth of the economy but its contribution in Nigeria is still limited by inefficiencies. It consequently suggests that there should be more and better investment in the health sector, education sector, creation of jobs, good governance and policies that should be put in place to diminish brain drain in order to make human capital contribution in sustainable economic growth.
Keywords
Economic Growth, Human Capital Funding, VECM, Health Expenditure, Education Expenditure.
Citations
IRE Journals:
Sydney Clever Keremah, Joseph Ubi Eyong "Assessing the Effect of Human Capital Financing on Nigeria’s Economic Growth: A Time Series Approach" Iconic Research And Engineering Journals Volume 9 Issue 10 2026 Page 2393-2404 https://doi.org/10.64388/IREV9I10-1716886
IEEE:
Sydney Clever Keremah, Joseph Ubi Eyong
"Assessing the Effect of Human Capital Financing on Nigeria’s Economic Growth: A Time Series Approach" Iconic Research And Engineering Journals, 9(10) https://doi.org/10.64388/IREV9I10-1716886
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