IMPACT OF GOVERNMENT EXPENDITURE ON HUMAN CAPITAL DEVELOPMENT IN NIGERIA

Abstract

This study assessed the impact of government expenditure on Human capital development in Nigeria using time series data of 1986-2020. Structural Vector Auto-regression (SVAR) model and the pair-wise causality test were adopted. The study found that government expenditure in health and education had an insignificant impact human capital development. The result also showed that public debt has an insignificant impact on human capital development; the Pair-wise granger causality test observed a unidirectional relationship and that this relationship flows from economic growth to human capital development. The study, therefore, recommends that the government needs to aim at meeting both regional and global expenditure benchmarks for human capital development; funds meant for the development of these sectors which have the potential of growing the economy aside the petroleum subsector should be effectively monitored. The study also recommends that Nigeria’s borrowing decision analysis should be expanded beyond the debt to GDP ratio to also include revenue to GDP ratio and that borrowings should be for productive projects and not for consumption purposes as has been the practice.