Full Project – The role of human capital on industrial growth in Nigeria

Full Project – The role of human capital on industrial growth in Nigeria

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  • Background to the study

Human capital is stated as a source of national development to all countries of the world. According to Khilji (2005) Education and health are the two major basics of human capital so therefore improving the quality of education and health services of the people is among the major ways of improving the quality of human capital given that the economy is provided with healthy trained human resources required for economic growth. Human capital is the term economists often use for education, health, and other human capacities that can raise productivity when increased (Todaro and Smith, 2009). According to Adekola (2014) the economic prosperity and functioning of a nation depend on its physical and human capital stock.Whereas the former hastraditionally been the focus ofeconomic research, factors affecting the enhancement of human skills and talent areincreasingly figuring in empirical research especially due to its role in industrial growth and economic prosperity of anation.

Although there are many ingredients of human capital but education and health are undoubtedly the most important components. It has been discovered that if an economy is to develop its human capital base, there must be the support of capital resources to complement human capital development. These capital resources could include Federal funding through increased budgetary allocation to the educational sector, infra- structural development, enactment It has been argued that the success or achievement of any development plan will depend largely on the realization of the critical role of human capital and that investment on human capital accounts for the rapid economic development of most countries. Olayemi (2012) pointed out that human capital

development stands out as a major catalyst to Industrial development and consequently economic growth. Thus, Babatunde and Adefabi (2005) argued that human capital development is triggering economic growth through factors like enhancing the employment opportunities and industrial development by increasing the number of knowledgeable workers and improving their skills and enabling them to new challenges.

On the other hand, Industrialization is generally accepted by policy makers, economic planners, researchers and professionals as one of the most desirable means for achieving objectives such as improvement in welfare, securing of vi-able employment, increasing of consumer and capital goods as well as expanding people’s choices generally. During the process of Industrialization, the use of extensive technology to boost productive patterns cannot be overemphasized. As a result, the development of the industrial sector, which is central to industrialization, will involvethe use of skilled personnel, extensive technology innovative management techniques, and other re-sources will be used to move an economy from inefficient means of production to the use of more sophisticated system. Therefore, as part of the human capital development process, there is the need for acquiring and increasing the number of persons who have the skills, education and experience in different fields of endeavour, as this is critical for the sustainable growth of a country

  • Statement of the problem

The priority of any country is to effectively, ethnically and efficiently manage the economy of the country for profitable long-term sustainable development and growth therefore; Human capital development plays a vital role in achieving long term sustainable industrial growth in Nigeria. Nigeria as one of Africa’s biggest economies still battles with problems of human capital development despite its large labour force and abundance of natural resources has still not been able to efficiently use its human capital on industrial growth to achieve sustainable economic growth. The most important dimensions of human capital include Education and health Therefore, what really matters in Nigeria is the empowerment of people majorly in the aspect of education and health and industrial mobilization for economic surplus into productive investment channels. There is also the need for the Nigerian economy to eliminate or minimize those constraints towards human capital development so as to enhance rapid industrial growth.

A large percentage of Nigeria’s population estimated to be 182.2 Million

Nigeria is endowed with abundant natural and human resources. It is expected that with such abundance of natural and human capital resources, Nigeria would have become a prominent figure among the most industrialized nations in the world. Sadly, one would wittingly agree that the situation appears to be the reverse. Nigeria continues to wallow in economic under development and technological backwardness. Iheriohanma (2004), posits that Nigeria’s development experience since her independence has been that of relatively poor economic performance as a result of low industrial productivity. The nation’s Gross Domestic Product (GDP) is decreasing and decline in productivity has led to reduced income, organizational closures and loss of jobs. Although the industrial sector in Nigeria is gradually picking up, but some of the principal challenges include poor infrastructure and lack of human capital. In Nigeria, the human development indicators have performed poorly over the years. The 2016 UN Human Development Report ranked Nigeria 153rd out of 193 countries. In addition, the failure of past government at infusing greater transparency and accountability in policy formulation affected the desired growth in the industrial sector.



From the above stated problems, the following questions then arise;

  1. What is the relationship between human capital development and industrialization in Nigeria?
  2. Does a long run relationship exist between human capital and industrialization in Nigeria?
  3. The main objective of this study is to examine the causal relationship between human capital development and industrial growth in Nigeria between 1981 and 2019.
  4. To test if there is a longrun relationship between human capital development industrial growth in Nigeria.



H0: human capital does not have significant impact on industrialization

H1: human capital does have a significant impact on industrialization

H0: human capital does not have a long- run relationship with industrialization

H1: human capital does have a long-run relationship with industrialization

Where: H0 is the null hypothesis

H1 is the Alternative hypothesis



In response to current global market changes, most firms have embraced the notion of human capital as a good competitive advantage that will enhance higher industrial performance. Nigeria’s most important macroeconomic objective remains how to achieve accelerated economic growth and reduce poverty. In order to achieve this laudable objective, certain variables which have the capacity to accelerate growth have to be identified, of all the contributory variable or factors to economic growth and increased productivity, human capital stands out as a major catalyst. To this end, effective investment in human capital is a key component of Industrial growth and long run economic growth and productivity. Firstly, the findings of this research will guide policy makers in making decisions on appropriate policies that will improve the use of human capital in industrial growth.

Secondly this study will determine the nature of relationship between human capital development and the industrial growth in Nigeria. In addition, this study is different from previous studies in terms of the fact that previous studies have concentrated on the role of human capital on the economy of Nigeria in general, but this study will be a little more specific by examining the industrial growth.



This study will cover a period of thirty-eight years from (1981-2019) the study consists of secondary data sourced from central bank of Nigeria statistical bulletin.

The accuracy of the data used in the study with respect to its source may not be 100 percent accurate. This alone may account for the limiting factor in the study. However, attempt will be made to ensure that the results obtained are reliable and credible for policy use.
There is also the issue of methodological weaknesses of the study. No one single method of data analysis is all embracing nor free from methodological errors in terms of estimation and measurements parameters. We shall therefore ensure that errors are minimized so as not to render the entire results invalid and unreliable.



  1. Human Capital can be defined as the collective skills, knowledge, intangible assets of individuals that can be used to create economic value for individuals in a society
  2. Industrialization can be defined as large scale introduction of advanced technical enterprise, manufacturing and other productive activities in an area.
  3. Economic growth can be defined as an increase in the production of economic goods and services from one period of time to another.
  4. Education can be defined as is the process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits
  5. Healthcare can be defined as the prevention, treatment, and management of illness and the preservation of mental and physical well-being through the services offered by the medical and allied health professions.



The rest of the chapters specifically covers the Literature review in chapter 2, Methodology in chapter 3, data presentation, Analysis and interpretation in chapter 4, lastly summary, conclusion and recommendation in chapter 5.




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Full Project – The role of human capital on industrial growth in Nigeria