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AN ANALYSIS OF HUMAN CAPITAL DEVELOPMENT AND PRODUCTIVITY GROWTH-CASE STUDY, NIGERIA Adejumo Oluwabunmi Opeyemi, Adejumo Akintoye Victor AN ANALYSIS OF HUMAN CAPITAL DEVELOPMENT AND PRODUCTIVITY GROWTH-CASE STUDY, NIGERIA

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In order to address the direction of causality between human capital and productivity growth in Nigeria, the study first investigated the pattern of productivity growth in Nigeria between 1970 and 2010. Following the endogenous growth model, which argued that technical progress, through an effective labor force, could lead to long-run growth which can be determined from within an economy; but it actually depends on the efficiency with which resources available to such an economy are utilized. This is against the exogenous growth model which emphasized that long-run growth can be attained by some unexplained technological progress, which is exogenous to any economy. Based on this controversy in literature, this study empirically determined the productivity growth in Nigeria, as well as the causal relation between human capital development and productivity growth in Nigeria using the Engle-Granger causality test. The results revealed that productivity growth has been very low and unstable in Nigeria as it oscillated between -1.5% and 0.6%. In addition, the nexus between human capital and productivity growth was examined. The findings revealed that while productivity growth caused human capital development, human capital development did not cause productivity growth.
revealed that the trend relationship between human capital and TFP growth had human capital growing was faster and higher than productivity growth. Human capital which was initially low at 4 percent in 1970 while TFP was about 0.6%; by 1980, TFP stood at-0.4% while human capital grew at 13% in 1980; a fall in the level of human capital was experienced in the early 1990s to an average of 23 percent but TFP declined to-0.06%; but by mid 1990s it started growing steadily from 20 percent to about 35 percent by 2005 while TFP was also positive at an average of 0.4%. However, the TFP and human capital level can be seen to be growing steadily in the mid-1970s, but while the level of human capital grew over the years, TFP experienced a declining growth. From this trend, it can be deduced that initially, the productive level of the economy was higher than human capital, but by the late 1970s, human capital grew faster than TFP. This may be as a result of the fact that while the acquisition of skill by the populace grew over the years in terms of knowledge and technical know-how, the areas for dissipating these skills were not really evident. This is evident in the trend of unemployment situation in Nigeria; as it grew from 2.4% in 1970 to 6.3% in 1980 and then by year 2000 it was about 13% (International Financial Statistics, 2011). The fascinating trend between unemployment and human capital development is that a similar pattern is generated for both variables, thereby having severe implications for productivity growth. This explains why human capital has not caused productivity growth, because, the trend revealed a positive relationship between human capital and unemployment rate; that is the higher the human capital developed, the higher the rate of unemployment
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