American Journal Of Multidisciplinary Research & Review (AJMRR) August-2024

American Journal of Multidisciplinary Research & Review (AJMRR)

Volume-03, Issue-08,
PP-01-06
www.ajmrr.com

Research Paper Open Access

THE RELATIONSHIP BETWEEN HUMAN RESOURCE

DEVELOPMENT PLANNING AND ECONOMIC GROWTH IN
NIGERIA.
ATAYI Abraham Vincent1,CHINSHAKA Ayuba Sitdang2 Edache Godwin
Omoche3Gomerep Dawak Velji4and Dishok Isaac Ngukwarai5
1, 2,5 Department of Economics, Plateau State University Bokkos, Nigeria.
3Department of Educational Management Law and Policy, University of Pretoria South Africa
4Department of School of Creative and Cultural Business, Robert Gordon University, Aberdeen

Abstract: Using time series data spanning the years 1980–2022, this study investigates the effects of human resource
development planning on economic growth in Nigeria. The limits testing research, which used the autoregressive
distributed lag (ARDL) framework, revealed the existence of cointegration between the indices of human capital
development and economic growth. The results also demonstrate that, during the examined years, the human
development index positively impacted Nigeria's economic growth; nevertheless, these effects were statistically
negligible. While government health spending indicated a negative and insignificant link with economic growth, the
life expectancy rate reveals a positive and significant relationship. Based on the study's findings, the study recommends
that government should prioritize funding for the health and education sectors in Nigeria, given their ability to drive
growth in the economy. It is also advised that the government invest more in the process of developing human capital
through an effort to addressing the issue of student enrollment.

Keywords: human resource, development planning, economic growth, Econometric and Nigeria.

I. INTRODUCTION
One of the most effective tools for human resource development is the application of knowledge. The idea
of human resource development is new to the economy; it is an undeniable fact that, of all the factors of production
at a country's disposal, human capital its citizens' health and education are prerequisites for resource access has the
capacity to be and continues to be the most important factor of production in the twenty-first century. This
fundamental fact has not changed despite the introduction of sophisticated technology such as computers and other
automated machines; human resources are defined as the pool of skills, knowledge, and personality that are
embodied in the capacity to fortify labor in order to generate economic value (Adelani, 2017).
It is also undeniable that education plays a significant role in the development of human resources. Since education
is a tool that both developed and developing countries can effectively use to achieve their respective national goals,
each nation places a higher value on the viability and sustainability of its educational system in relation to human
resource development. An essential component of any economic sector is education. The key idea is that the best
economic investment any country can make is in the development of its people.
According to Jhingan (2005), gathering physical capital is predicted to be given more weight than human capital
during the process of economic growth and development. These tangible capital resources are made up of human
capital resources as a whole, which includes education, training, and healthcare delivery. These physical resources
are derived from capital. The combination of human resource development can boost output, revenue, enhance
physical and mental well-being, and help people form positive habits like accountability, integrity, and
trustworthiness.
Nigeria's human capital development is fragile, particularly in light of the nation's aspiration to rank among the
world's top economies. However, this goal will be in vain if human capital formation is not given the proper

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American Journal Of Multidisciplinary Research & Review (AJMRR) August-2024

consideration and top priority. In order for Nigeria and Nigerians to compete in the highly skilled and knowledge-
based global economy of the twenty-first century, human capital building is a requirement. Human capital formation
is distinct and unquestionably the axis for any major program of socioeconomic development in Nigeria or any other
country, as any country's efficacy in the new international economic order (NIEO) is closely linked to its
development of human resources (Deinibiteim & Emeh, 2021).
Therefore, it is very important to the world at large to pay attention to human resource development.
The Nigerian government has been planning and working feverishly throughout the years to guarantee that the
degree of human capital development rises. The government has allocated more funds in the budget to advance
health and education (Ubaka, Nwaonuma, & Ifeaka, 2022). Nigeria is endowed with an abundance of natural
resources, but despite this, its economy is still classified as third world. The fundamental task of the political class
and its leaders has been unsuccessful in producing the necessary individuals to utilize Nigeria's diverse natural
riches. Paradoxically, despite having these resources, the country's economy has grown slowly.
The statement makes it very evident that policymakers must take measures that support the growth of human capital
investments in order to promote human capital development. In light of these circumstances, the purpose of this
study is to investigate the relationship between government spending on health care and education and the country's
economic growth.
.
II. LITERATURE REVIEW
The Concept of Human Resource
Human resources development is the purposeful, ongoing process of gaining the necessary information,
abilities, and experiences to provide economic value for promoting long-term, sustainable national development,
according to Harbison (1973). Numerous studies conducted worldwide have recognized the importance of human
resource development in achieving meaningful and sustainable economic growth and development. "Human
resource; not capital nor income, nor material resources constitute the ultimate basis for the wealth of nations;
capital and natural resources are passive factors of productions, while human beings are the active agent who
accumulates capital, exploits natural resources, builds a social-political organization, and also carries forward
national development clarity," he said, illustrating the significance of human resource development and utilization.
Any nation that cannot provide its citizens with the technical know-how and abilities they need to fully utilize them
in the nation's economy will never be able to build anything else. Human resource development is viewed by
Jhingan (1996) as an investment in people. According to him, it's a means of obtaining and multiplying individuals
possessing these abilities, education, and national political growth. As a result, investing in human capital formation
is linked to supporting human development as a resourceful and innovative individual.
The Concept of Development
The idea of development is broad and encompasses the entirety of people's well-being—that of individuals,
families, society, and country. As a result, it is characterized by numerous academics from various angles.
According to Dudley Seer (1972), development is a way to set the stage for the emergence of the human personality.
He proposed a set of standards for gauging progress, including whether or not there has been a decline in poverty,
unemployment, and inequality; whether or not education and demographics have improved; and whether or not there
is social fairness and self-reliance. It is impossible to classify a nation as developed if the aforementioned indicators
show a negative tendency. Improvements in social justice, education, demographics, self-reliance, and the reduction
of poverty, unemployment, and inequality are all considered forms of development.
Thus, development is achieved when people’s needs and aspirations are met, thereby enhancing their wellbeing.
The Concept of Economic Growth
Todaro (1977) defined economic growth as the gradual process of increasing the economy's productive
capacity over time in order to raise levels of national income. But the majority of economists are also interested in
how the economy's output grows per person over time, in addition to the economy's overall growth in the output of
goods and services. Ohale (2002) provided two definitions of economic growth as a result. In one sense, the
expansion of the economy's potential for production results in a rise in the supply of products and services within the
economy over a specific time frame. In a different context, as the consistent rise in per capita production of goods
and services across time
Since a consistent increase in the output of goods and services will probably result in an increase in per
capita output (though this may depend on the rate of population growth), these two senses are not in conflict with
one another. Economic growth, according to Mayer (2010), is the significant rise in a nation's real GDP per capita
over time. According to Gbosi (2015), economic growth entails a nation's capacity to produce more commodities
and services.
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The Theory of Human Capital Investment / Lucas Growth Model

A growth model is presented by Lucas Robert (1988) in which a production function of the type is used to create
output. He makes the assumption that spending money on education results in the creation of human capital, which
is a key factor in the process of growth.
Y – Aka (ϊhl)I – a
Where Y, A and K are usually defined and O< A< L, where L is defined as the proportion of total labour time spent
working and is what Lucas calls the stock of ―Human Capital‖. Prior to dissecting the model, Mankin (1995)
persistently debated, characterizing "human capital" as the store of knowledge that has been instilled into human
minds via study and defining "knowledge" as the culmination of technological and scientific discoveries (what is
written in textbooks, academic journals, websites, and the like). Human capital has an externality, according to the
Lucas model. The premise is that when one is surrounded by the capital of others, they are all more productive. The
model also demonstrates the unsatisfactory nature of this decentralized approach due to the fact that individual
consumers do not fully benefit from society.
The theory faced criticism due to the fact that human capital can be amassed infinitely and with no diminishing
returns. Additionally, the model treats technology as a public good from the perspective of its users, with technology
being provided endogenously as a result of investment decisions made by firms. Because of this, businesses can be
viewed as price takers, and an equilibrium with numerous businesses can exist under perfect competition.
Empirical Review
Adelakun (2019) investigated Nigeria's economic expansion and human capital development. This study uses a
conceptual analytical framework that uses the theoretical and ordinary least square (OLS) to analyze the relationship
using GDP as a proxy for economic growth, total government spending on health and education, and enrollment
patterns in primary, secondary, and tertiary education as a proxy for human capital. This demonstrates the relevance
of capital development and economic growth in Nigeria. Since human capital is seen as a key tool for economic
growth in Nigeria, the analysis confirms that there is a strong positive relationship between it and economic growth.
Based on the findings, stakeholders are advised to develop more practical methods of developing human
capabilities.
Also, the proper institutional framework should be put in place to look into the manpower needs of the various
sectors and implement policies that will lead to the overall growth of the economy.
Emeh and Pepple (2019) used time-series data from 1986 to 2017 that were obtained from the Central Bank
statistical bulletin to investigate education's role as a catalyst for the growth of human capital in science and
technology in Nigeria throughout time. ADF was used to test the variables for unit root. ECM and the Johansen
cointegration test were also performed. The outcome demonstrated that the factors had a long-term association. The
outcome also showed that, during the study period, the administrative expansion of the economy is influenced by the
development of human capital.
In their 2017 study, Adenike and Sheriffdeen investigated the interplay between the elements of human capital
investment and economic growth in Nigeria between 1986 and 2014. The Central Bank Statistical Bulletin of 2014
included secondary annual data on health, education, real GDP, and gross capital creation that were used in the
study. The Fully Modified Ordinary Least Squares (FMOLS) method was used to examine the data. The study's
findings demonstrated a strong and positive correlation between Nigeria's growth and the interactive effects of its
human capital components.
Using annual time series data from 1981 to 2015, Ogunleye, Owolabi, Sanyaolu, and Lawal (2017) used Ordinary
Least Squares regression analysis to investigate the relationship between the development of human capital and
Nigeria's economic growth. The empirical findings demonstrated that, as measured by the gross domestic product,
economic growth is significantly influenced by the development of human capital. Theoretically, the indicators of
human capital development—secondary school enrollment, tertiary school enrollment, total government spending on
health care, and total government spending on education—show a positive and statistically significant influence on
Nigeria's economic growth, suggesting that these indicators are essential to the country's economic expansion.
However, life expectancy and primary school enrolment exhibit a negative and statistically insignificant impact on
the economic growth of Nigeria.
Jaiyeoba (2015) looked at Nigeria's economic expansion and investment in human capital between 1982 and 2014.
The research utilized Ordinary Least Squares, Johansen Co-integration, and trend analysis methods. The study's
conclusions demonstrated a long-term correlation between public spending on health, education, and economic
expansion. The results also showed that, given the national discussion surrounding health and education issues, the
study has significant implications for those areas of policy.
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American Journal Of Multidisciplinary Research & Review (AJMRR) August-2024

Adofu, Abdulsalam, and Agama (2015) used a straightforward regression analysis to look at how human capital
development affected Nigeria's economic growth. The conclusion showed that variations in the explanatory variable
explained almost 91% of the variations in the dependent variable (GDP). This clarifies the role that human capital
development plays in economic growth to a considerable extent. The more the government prioritizes the
development of human capital, the more economic improvement will be seen.

III. METHODOLOGY
This study used an ex-post facto research design, which is frequently used to explore cause-and-effect
relationship theories in place of actual experimental research. The study used the Johansen cointegration test, the
augmented Dickey-fuller unit root test, and the econometric error correcting mechanism approach.
Secondary data are needed for this study because it is analytical in nature. Additionally, the data used in this work
were gathered from the World Bank, UNDP, and CBN's Statistical Bulletin. As a result, the data continue to be
secondary.

Model Specification
The model for this study is stated below:
RGDP = F (GEE, GEH, HDI, LER)
The econometric form of the model is
RGDPt = βo + β1GEEt + β2GEH+ β3HDI+β4HD+ut
Where:
RGDP = Real Gross Domestic Product
GEE = Government Expenditure on Education
GEH = Government Expenditure on Health
HDI = Human Development Index u = Error Term
LER = Life expectancy Rate
β0 = the constant parameter β1, β2, and β3 = the slope parameters
Apriori expectation: β1, β2, β3and β4>0.

IV. RESULT PRESENTATION ANDANALYSIS DATA

Table 1 shows the outcomes of the Augmented Dicker Fuller unit root test. All of the series were non-
stationary at level, according to the statistics from the Augmented Dicker Fuller test, although some became
stationary at first difference and others at levels. Most significantly, the outcomes demonstrate that this model may
be safely used with the ARDL methodology.
Unit Root Test
Table 1 displays the outcomes of the Augmented Dickey-Fuller unit root test. GEE, LER, and RGDP were
stationary at first differencing with intercept at the 5 percent significance level, according to Table 1's unit root test
result. Probability values stable at levels with GEH and less than the 5% level of significance. To determine whether
the variables in the model have a long-run equilibrium relationship, the Johansen Co-integration test must be used,
as some variables demonstrate stationary at first differencing and others at levels.

Table 1: Augmented Dickey Fuller (ADF) unit root test result

VARIABLE LEVEL T-STATISTIC PROB DECISION
5% (1ST DIFF)
GEH -2.933158 -3.197136 0.0272 1(0)
GEE -2.935001 -10.08685 0.0000 1(1)
HDI -2.935001 -9.744437 0.0000 1(1)
RGDP -2.935001 -7.117306 0.0000 1(1)
LER -2.935001 -7.287203 0.0000 1(1)
Source: Authors Computation, 2024
Bounds Test for Co-Integration
The bound test findings, which are displayed in Table 2, reveal that, at the 5% significance level, the null hypothesis
is readily rejected in comparison to its alternative. The long run model of the error correction model is estimated,
and the derived F-statistic of 6.848759 is greater than the lower and upper critical bound values at 10%, 5%, and

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1%, respectively. This suggests that the variables under consideration have a long-term association. Following the
completion of the bound co-integration test, an ARDL analysis is required to determine whether a long-term
relationship exists between the variables. The findings are shown in Table 3.

Table 2: Bounds test Result

F-Bounds Test Null Hypothesis: No levels relationship
Test Statistic Value Signif. I(0) I(1)
F-statistic 6.848759 10% 2.2 3.09
K 4 5% 2.56 3.49
2.5% 2.88 3.87
1% 3.29 4.37
Source: Eviews output, 2024

Table 3: Long Run coefficients of ARDL

Variable Coefficient Std. Error t-Statistic Prob.
LOG(GEE) 0.114785 0.051541 2.227083 0.0336
LOG(GEH) -0.005288 0.026946 -0.196226 0.8458
LOG(HDI) 0.744922 0.807284 0.922750 0.3635
LOG(LER) 4.423135 1.980626 2.233200 0.0331
C -4.644842 7.882125 -0.589288 0.5601
Source: Eviews 10 output, 2024
Table 3 presents the long-term association between economic growth and the development of human
capital in Nigeria during the study period. Government spending on health showed a positive (0.1147) and
statistically significant trend over the long term, according to the long run coefficients. This implies that an 11%
boost in economic growth will result from a 1% increase in government spending on health. Additionally, the table
showed that government spending on health had a negative (-0.00528) and statistically insignificant coefficient. This
indicates that government spending on health care and economic growth in Nigeria are correlated in an indirect
way.This suggests that a 1% increase in government spending on health care will result in a 0.00052% drop in
economic growth. As a result, there was a positive and statistically significant correlation between the human
development index and economic growth. The rate of life expectancy is statistically significant and favorable. This
demonstrates that an increase in life expectancy of 1% will result in an increase in economic growth of 442%.

V. CONCLUSION AND RECOMMENDATIONS

The impact of human resource development on Nigeria's economic growth between 1980 and 2022 was
experimentally evaluated in this article. In order to do this, time-series data on variables like real gross domestic
product, government spending on health and education, life expectancy rate, and the human development index were
gathered from the United Nations Development Programmes (UNDP), the World Bank (IBRD), and the CBN
Statistical Bulletin. The unit root test of the Augmented Dickey-Fuller was utilized. To determine whether there is a
long-term link between the variables of interest, the ARDL bound test was used. Evidence from the results showed
that some of the variables had long-term associations with one another while one at a level and were individually
integrated of order one.
This implies that the variables adopted for the study are collectively significant in explaining changes in economic
growth in Nigeria.
According to the ARDL result, there is a positive correlation between economic growth and increases in government
spending on life expectancy, the human development index, and education. The life expectancy rate and government
spending on education were statistically significant factors influencing changes in economic growth. However,
during the study period, government spending on health indicates a negative and negligible increase in Nigeria's
economic growth. The model appears to be useful for policy recommendations based on the serial correlation.
The study recommends thus;
(i) The government must work closely to ensure that funds are allocated to the health sector in a way that improves
health standards, lowers the death rate, and increases citizens' life expectancy. This is because a healthy workforce
and population are essential for rapid and sustainable productivity growth.
(ii) Enough money needs to be set aside for education in order to properly utilize the social and productive benefits
that could support the actual sector of the economy.

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American Journal Of Multidisciplinary Research & Review (AJMRR) August-2024

(iii) The Industrial Training Fund (ITF) and the National Directorate of Employment (NDE), which oversee national
skill development and training programs, should be strengthened and updated by the government.

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