Human capital remains one of the instrumental tools employed to transform an economy from a third world status to a first world status. In other words, human capital development is very critical to the development of a nation. However, the low level of human capital development in Nigeria has greatly hampered the growth and development of the economy. Poor education system, lack of basic amenities, high illiteracy rate, and unemployment contributes to the low productivity of human capital in Nigeria. Thus, this study analyzes the effect of human capital development on Nigeria economy with a view to unearthing its long and short run impact. Time series data were collected on key variables used to proxy human capital as well as economic growth. The data covers the period of 1980 to 2016 and were sourced from the Central Bank of Nigeria statistical bulletin, Nigeria Bureau of Statistic, and World Bank database on Nigeria. Both descriptive and inferential statistics were employed to analyze the characteristics of the data. The unit root test shows that the series are stationary at first difference and the Johansen cointegration shows that there are three cointegration relationship in the model. Findings from the estimated short run analysis shows that human capital has a positive effect on economic growth in Nigeria. Based on the findings, the study recommend that proper institutional framework should be set up by the government in order to manage manpower need in Nigeria.
Keywords: Human capital, economic growth, economic development, Johansen cointegration, error correction model, Augmented Dickey Fuller Test, Unit Root Test, brain drain, short run analysis, long run analysis
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