Munich Personal RePEc Archive

What are the Short-run and Long-run Drivers of Human Capital Development in Nigeria?

Nwaogwugwu, Chii and Evans, Olaniyi (2019): What are the Short-run and Long-run Drivers of Human Capital Development in Nigeria? Published in: A Festschrift in Honour of Professor Folayan Ojo, Lawanson O. I & Nwakeze N. M (Eds.), University of Lagos Press (2019): pp. 263-284.

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Abstract

This paper investigated the drivers of human capital development in Nigeria in the short and long run. Using an ARDL approach over the period 1980 to 2015, the results show that expenditure on education and interest rate have positive significant impacts on human capital in the long but not in the short run. Similarly, exchange rate, another policy variable, has significant negative impacts on human capital in the long but not in the short run. On the contrary, trade openness has insignificant positive impacts on human capital. Therefore, the estimated coefficients of our model show that macroeconomic policies such as fiscal, monetary, and exchange rate policies have significant impacts on human capital while trade policies have insignificant impacts. That is, the fluctuations in human capital in Nigeria depend and respond to fiscal, monetary, and exchange rate policies. The key conclusion is that any policy advice should be sensitive to the level of human capital in the country and ideally complemented by policy effectiveness that will determine the long-term success of human capital development.

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