Human Capital Investment, Consumption and Growth Nexus in Nigeria: Long-Run Path

Human capital investment has been seen as an impetus to sustainable economic growth and this has necessitated the increase in government spending by major economies including Nigeria in order to achieve a steady long-run growth path. On this basis, the effect of human capital investment on economic growth in Nigeria between a decade after independence 1970 and 2009 is examined based on the endogenous growth theory framework. Following the underlying assumptions of the endogenous growth model, real output is regressed on private capital investment, government human capital investment, human capital consumption, and openness to trade. The time series of the variables were examined using the Augmented Dickey-Fuller unit root test and all of the series were found non-stationary at levels excluding population growth of economic active. Engle-Granger co-integration test result revealed that there is long-run growth path between human capital investment and economic growth in Nigeria. However, the result of the co integrating regression indicated that capital investment from the private and public sector, and human capital consumption tends to be important factors that enhance real economic growth in Nigeria, while, growth of economic active population and economic openness exert negative influence on economic growth in Nigeria. Keywords: Human Resource Investment, Human Capital Consumption, Private Capital investment, Government spending, Economic Growth.