Impact of government educational expenditure on economic growth 1986 – 2014.


The relationship between
government expenditure in the educational sector and economic growth has
continued to generate series of debate among scholars. With its large reserves
of human and natural resources, Nigeria
has the potential to build a  prosperous
economy, reduce poverty significantly, and provides the health, education and
infrastructural services that its population needs. Nevertheless, despite the
country’s relative oilwealth, poverty is widespread, and Nigeria’s basic
social indicators place it among the twenty poorest countries in the world
(World Bank, 2004). In addition, many Nigerians have continued to wallow in
abject poverty, while more than 50 percent live on less than US$1 per day.
Dilapidated infrastructure (especially roads and power supply) in Nigeria is
everywhere a visible sign which has led to the collapse of many industries, and
has resulted in high level of unemployment. Moreover, macroeconomic indicators
like balance of payments, importobligations, inflation rate, exchange rate, and
national savings reveal that Nigeria
has not fared well in the last couple of years (CBN, 2009).
Although, incidence of poverty
in Nigeria is much higher in
the rural areas than in the urban centers, the urban slum-dwellers form one of
the more deprived groups in Nigeria.
The poor are those who are unable to obtain an adequate income, find a stable
job, own property or maintain healthy living conditions. They also lack an
adequate level of education and cannot satisfy their basic health needs.
As such the poor are often
illiterate, in poor health and have a short life span (Amaghionyeodiwe and
Osinubi, 2004). A good way of generating economic growth is through educational
development. The basic importance of education is to enable individuals with
knowledge and the ability to apply that knowledge. Education is therefore
commonly regarded as the most direct avenue to rescue a substantial number of
people out of poverty since there is likely to be more employment opportunities
and higher wages for skilled workers. However, public spending on education has
been low, being only 0.9 percent of the GNP in 2002 (World Bank, 2004).
Most of the evidences in the
human capital growth regression analysis are cross-country regression analysis
of developing nations and OECD countries many of which are yet to be done for
individual countries. Again, while the literature is dominated by studies
investigating the relationship between government expenditure and economic
In many African countries, formal education is in a state of crisis. While
curriculum reforms continues to serve as an ongoing source of public policy
debate, African leaders are confronting 
increasing difficulty in allocating educational resources to meet
present and future levels of educational demand. The paralysis that has been
unfolding is one characterized basically by education’s rising claim on public
sector resources against a backdrop of widespread poor economic growth,
mounting international dept and rapidly growing population, whose demand for
education cannot be met readily by traditional means. There   has 
been a positive relationship between per capita GDP and  educations share of GDP. Wide disparities
suggest that since education must compete with other claims for investment
resources,  how efficiently education is
delivered may be as important as the level of resources. Within this contest,
we ask what options are available to respond to Africa’s
growing educational demand, how can they be managed and what role can these
options play in promoting accelerated economic growth and development?
Education is both a private and social investment that is shared by
individual students, their families, employers, governments and other groups
including international agencies. The sharing arrangement varies considerably
from country to country,  both in the
proportion of public and private funds allocated to education and in their
mechanism by which the cost of education is founded. It thus yields direct and
indirect benefits both to individuals and to the society. The most obvious
benefits of education to individuals  is
higher lifetime earnings, and to the society, higher productivity of educated
workers and the additional contribution to national income over their entire
working lives (Psacharopopulos, 1994).
A major controversy among analysts and policy makers   concerns the objective of educational
development. Some have suggested that education should be provided for its own
sake as a means of enriching individual’s knowledge and   developing their full personality.  This concept of education has continually   influenced policies in advanced countries of
the world.  Others hold that education
should seek to prepare people to perform functions that are essential for the
transformation of their environment. This 
two  point of view can be
considered in terms of educational capital good in rooted in the concept
of  human capital. This attaches high
premium to human skills as a factor of production in the development process. A
corollary of this is that human skill or productivity is just as important
input in the process of development of finance, natural wealth and physical
plant. Because education plays a most important role in the creation and
improvement of human capital, its relevanceand 
important to economic growth and development are now well recognized in
development planning. Experiences of developing countries during the past decade
has indicated that shortage of talents and skills needed for development can
decisively retard economic progress.
 It is widely acknowledged that
education is an important determinant factor of economic growth. Prominent
classical and neo-classicaleconomists such as Adam smith, Romer, Lucas and
Solow emphasized the contribution of education in developing their economic
growth theories and models. The main theoretical appproaches of modelling the
linkages between education and economic performance are the neo-classical
growth models of Robert Solow (1951) and the models of Romer (1990). Apart from
the theoretical aspects, numerous empirical studies have focused on the issue
of  a education and economic development.
According to Ismail (1998), education is considerd as a long time investment
that leads to a high production for a country in  the future. Infact, economists argue that
advance educational sector will certainly lead to successfulness of a country’s
economic and social ddevelopment. Therefore, most of the developed and
developing countries emphasize the enhancement of the educatrional sector.
Nigeria has no exceptions in enhancing its educational system in order to be a
world class country (Awang and Ibrahim, 2008). Nigeria’s commitment in developing
it’s education sector has been tremendous. This can be seen from nigeria’s
annual budget allocation. Nigeria
has allocated significant amount of budget for educational sector and keep it
increasing for each budget seesion. 
Despite the financial turmoil that badly affected nigeria’s economy in which had devaluated Nigeria
currency, government’s allocation for the educational sector has never been
reduced. Emphasy on the educational sec tor has been successful, most
especially in the late 1980s and early 1990s, as it plays important role in
achieving national development agenda and contributed to the country’s economic
growth and literacy rate. Sheehan (1971) listed 
some direct benefit that countries gain from education. This include
increase in productivity, labour’s income, countries economic growth and
literacy rate. In addition, education could also improve efficiency of income
allocation as well as labour’s  mobility
and transfer in accordance to work 
demand of trained workers.
Nigeria is a multi-ethnic group, but consisted of three major ethnic groups
namely, the Igbos the inhabited the Eastern part of the country, the Hausas
which inhabited the Northern part and the Yorubas at the Western part.
Before the coming of the colonial masters, Nigeria practised a traditional
education system which comprises of teachings based on religious background
(islam and christianity). Essentially, the major aim of educatioon was to
foster good character in the individual member of the society for them to be
useful in  the larger society. For
instance, local stories and folktales were usually told and references to
anscestors who demonstrated the act of legendary. Notwithstanding that this
system was a hallmark for the preservation of socio-cultural values and norms,
the system fail to  make room for
critical thinking and research development.
The rapid expansion of education system over the last three decades,
compounded by more recent global economic crisis      and fiscal   stringency due to over dependence     on oil 
has  left both lever and higher
institutions in Nigeria short of funds for their    operation in relation to the operations
imposed on them.
          The idea that education is a form of
investment  in human capital is one of
the most important development in economics in recent decades and it has had
considerable impact on educational planning both in developed and developing
countries. For both government and individuals, the choice between different
ways of investing resources rests to a large extent on an evaluation of the
cost and benefit associated with the investments.
          In Nigeria, the decline in the quality
of education at all levels has become a fact of national life. Indeed, the most
significant event in the sector in the recent past has been the continuing
crisis besetting the educational system. This crisis is rooted in the
deteriorating conditions within the citadels of learning, in respect of
teaching facilities and other infrastructureal facilities, the welfare of all
those involved in the teaching profession and the ever increasing cost of
education. This has culminated in students unrest and industrial actions by
lecturers and teachers through their respective embrella association such as
Academic Staff Union of Nigeria Universities (ASUU), Nigeria Union of Teachers
(NUT), College of Education Academic Staff Union (COEASU) etc. at the different
levels of educational system.
          Owing to the failure of the state and
local government to fund primary and secondary education appropriately, the
federal government moved to take over the affairs of their tiers of the system
at the expence of the higher education. Due to this shift in the government
policy, the crisis in the Nigerian educational system, and their fundamental causes
i.e. the gross under funding of the institutions, poor conditions of services
for teachers among other issues have continued unabated. The study seeks to
evaluate the efficiency of government educational expenditure as it impacts on
the economic growth and development, human capital development and the literacy
rate in Nigeria
ranging from 1986 to 2012.
          The main objective of the research
work is to determine e impact of the governments’ educational expenditure on
Nigerian economic growth between 1986 – 2014.
CHAPTER 1 – 5 including regression analysis and registration data 


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