Economics and Human Capital

Abstract
This study examines the relationship between human capital development efforts of the Government and economic growth in Nigeria. It seeks to find out the impact of government recurrent and capital expenditures on education and health in Nigeria and their effect on economic growth. The data used for the study are from secondary sources while the augmented Solow model was also adopted. The dependent variable in the model is the level of real output while the explanatory variables are government capital and recurrent expenditures on education and health, gross fixed capital formation and the labour force. The result shows that there exists a positive relationship between government recurrent expenditure on human capital development and the level of real output, while capital expenditure is negatively related to the level of real output. The study recommends appropriate channeling of the nation’s capital expenditure on education and health to promote economic growth.
Keywords: Human capital development, Capital and recurrent expenditure, Economic growth
JEL Classification: H5, O43
1. Introduction
Human capital has been recognized globally as one major factor that is responsible for the wealth of nations.
According to Smith (1776) and Folloni and Vittadini (2010), human capital refers to the acquired and useful abilities of all the inhabitants or members of the society. The importance of human capital development to economic growth has been a motivating factor for scholars to examine the subject matter. For instance, several studies in Nigeria has examined, among other important issues, the nature of causality between human capital development and economic growth in Nigeria (Awe and Ajayi, 2010); the contributions of human capital to economic growth in Nigeria (Ogujiuba and Adeniyi, 2004; Omotor, 2004; Olaniyan and Okemakinde, 2008;
Lawanson, 2009; and Diawara, 2009), the role of human capital in Nigeria’s economic development (Dauda,

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