Abstract
This study was on the impact of human capital on economic growth. Three objectives were raised which included: To ascertain the role of education on economic growth, to ascertain the role of innovation on economic growth and to ascertain the role of technological knowledge on economic growth A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from CBN. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Chapter one
Introduction
1.1Background of the study
The role of human capital in economic growth cannot be overemphasized. The development of human capital has been recognized by economists to be a key prerequisite for a country’s socio-economic and political transformation. Among the generally agreed causal factors responsible for the impressive performance of the economies of most of the developed and the newly industrializing countries is an impressive commitment to human capital formation (Adedeji and Bamidele, 2003; World Bank, 1995; Barro, 1991). This has been largely achieved through increased knowledge, skills and capabilities acquired through education and training by all the people of these countries. Human capital plays a key role in versions of both neoclassical and endogenous growth models (Mankiw, Romer and Weil, 1992; Rebelo, 1991; Sianesi and van Reenen, 2003). The critical difference is that in the first group, economic growth is still ultimately driven by exogenous technical progress, whereas in the second, no additional explanation is needed and human capital is much more important. Endogenous growth models predict that a permanent change in some policy variable can cause a permanent change in an economy’s growth rate. Unlike time series evidence for the US, at first sight the data for many developing economies are broadly consistent with this prediction (Jones, 1995), showing accelerated growth after 1945. The exogenous technical progress of the neoclassical model can change in response to policy as well. According to Parente and Prescott (1999, 2000), the choices of each country’s citizens determine how fast they raise productivity, by diverting their time from normal work to productivity-enhancing activities. In doing so, they can draw on the world stock of knowledge and borrow capital on world markets. Policy-induced constraints, such as taxation, or entry barriers at the plant level, create international differences in aggregate productivity, even when the stock of useful knowledge is common to all countries.
It has been stressed that the differences in the level of socio-economic development across nations is attributed not so much to natural resources and endowments and the stock of physical capital but to the quality and quantity of human resources. According to Oladeji and Adebayo (1996), human resources are a critical variable in the growth process and worthy of development. They are not only means but more importantly, the ends that must be served to achieve economic progress. This is underscored by Harbinson (1973) who opined that “human resources constitute the ultimate basis for the wealth of nations. Capital and natural resources are passive factors of production; human beings are the active agents who accumulate capital, exploit natural resources, build social, economic, and political organizations, and carry forward national development. Clearly, a country which is unable to develop the skills and knowledge of its people and to utilize them effectively in the national economy will be unable to develop anything else”. Investment in human capital plays an important role in increasing competitiveness, improving quality of life of the population and in generating economic growth and development of a country. Currently, Nigeria wishes to be among twenty most developed countries in the world by year 2020. To give effect to this, one of the pre-requisites is to ensure that capable manpower is available in various areas of social, political, institutional, technological and economic endeavours which drive the process of growth, development and industrialization. Consistent with the NEEDS programme of 2004, and the current Vision 20: 2020 development programme agenda, the country’s human resource development needs to be strengthened and stabilized in order to accelerate economic activities and trigger off higher productivity, income and economic growth and development. The nation’s aspiration to be in the league of 20 leading economies in the world by Year 2020 emerged on the realization that the endowment of Nigeria in material and human resources places her in good position to achieve this greatness. But the Human Development Report of UNDP (2008) shows that Nigeria is still at the low level of human development compared to countries in emerging economies. This is worrisome and poses a threat to 20: 2020 agenda. Education, as a measure for quantity, availability and human resource quality is the sole method which can be used to analyze the impact of human resource on economic growth (Benhabib and Spiegel, 1994). To many people, capital is in the form of bank account, financial and other income-generating physical assets.
Jhingan (2005) points out that in the process of economic growth, it is customary to attach more importance to the accumulation of physical capital than human capital. These physical resources are forms of capital. But aside these tangible capital resources are human capital resources as an aggregate of education or schooling, training and health care delivery. These aggregation of human resource development can further increase productivity, income, improve health and fitness, good habits in individuals such as being trustworthy and responsible. Therefore, education and training are the most important factors in human resource development. Economists often use the term human capital for education, health and other human capabilities that can enhance productivity (Todaro and Smith, 2003). Thus, quality of human resources connotes the state of education, health and other human capabilities that can raise productivity when increased. Studies in the United States of America have shown that high school and college education lead to improvement in earnings even after taking into consideration the direct costs (study fees, cost of purchasing books and other materials) and indirect costs (foregone income from being employed) during schooling. Studies in several other countries with different cultural and economic systems also showed the same outcome that income obtained by educated people will always be above the average income level.
Statement of the problem
Growth continuum per capita income of a country is partly dependent on scientific and technical knowledge development, which further improves productivity of labour and other inputs in production. In fact, economic growth is also closely connected with new knowledge drive and also quality of human resource. This is obvious from the fact that there have been tremendous achievements in education accompanied with major development in technological knowledge in all countries which have achieved significant economic growth. Leading economic record for countries like Japan, Taiwan and a few more Asian countries for example, show the importance of human resource development in playing its role in leading economic growth. Lawanson (2009) points out that health and education are two closely related human (resource) capital components that work together to make the individual more productive. Hence, taking one component as more important than the other is unrealistic as a more educated individual who is ill is as inefficient as an illiterate but healthy individual.
Objective of the study
The objectives of the study are;
- To ascertain the role of education on economic growth
- To ascertain the role of innovation on economic growth
- To ascertain the role of technological knowledge on economic growth
Research hypotheses
The following research hypotheses were formulated;
H0: there is no role of education on economic growth
H1: there is role of education on economic growth
H0: there is no role of technological knowledge on economic growth
H2: there is role of technological knowledge on economic growth
Significance of the study
The study will be very significant to students, Nigeria government and the policy makers. The study will give a clear insight on the impact of human capital on economic growth. The study will also serve as a reference to other researcher that will embark on the related topic
Scope and limitation of the study
The scope of the study covers the impact of human capital on economic growth.
Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work
This material content is developed to serve as a GUIDE for students to conduct academic research
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