Investigation of the Impact of Government Education Spending on Economic Growth
CHAPTER ONE
OBJECTIVE OF THE STUDY
The objective outlined in this study will tend to provide answers to research questions stated above. The objectives are subdivided in specific and general objectives;
The specific objectives are:
- To reveal the impact of government capital expenditure in education on economic growth.
- To examine the impact of government recurrent expenditure in education on economic growth.
- To access the impact of primary, secondary, and tertiary enrollment on economic growth in Nigeria.
- To analyze the effect of human capital formation on economic growth in Nigeria.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
STUDENT ROLE PERFORMANCE
Investing in education has long been well-thought-out as a key factor in enhancing economic growth in the economic literature. Education develops, enhances and improves human capital and human capital in the form of education has economic value and thus education become an important form of investment in human capital. The endogenous growth model developed by Romer (1986) and Lucas (1988) focused on the role of human capital as a main source of increasing returns and divergence in growth rates between developed and underdeveloped countries. Studies by Mankiw, Romer, and Weil (1992) further stressed the indispensable role of education as the most important production factor in increasing human capital as a determinant of economic growth. Education, through schooling, aids individuals acquire knowledge which can be transformed into higher wages and higher economic growth. Investment in educated and skilled workers will bring out efficient use of labor and capital resources for greater productivity. This was collaborated by Nelson and Phelps (1966) aa well as Benhabib and Spiegel (2005) who accentuated that education can facilitate the sharing and transmission of knowledge needed for developing new technologies. This notwithstanding, Pritchett, (1991) found a significant negative relationship between human capital and economic growth. Most recent studies show the existence of a positive relationship between education and economic growth. For instance, Otani and Villanueva (1993) studied the determinants of long-term growth in developing countries. They examined fifty-five (55) developing countries using time series data from 1970 to 1985. They found that education program and human capital investment such as vocational training and health training increases a country’s output and per capita income. As such, countries will achieve high level of economic growth when they invest more in education. They stated that human capital development contributes an annual average of 1% increase in developing countries’ growth rate. Al-Yousif (2008) paper examined the nature and direction of the relationship between education expenditure as a proxy for human capital and economic growth in the six GCC economies using timeseries data for the period 1977 to 2004. The analysis employs a Granger-causality test within an errorcorrection framework. His findings were mixed and vary across both countries and measures of human capital. Based on this, he submitted that to deepen our understanding of the complex relationship between education and economic growth, additional studies need to be conducted on the issues at hand with a special focus on countries that are similar in their policy and institutional environment using time-series data. And, that empirical result in this area can be more insightful if researchers could develop more accurate measures of human capital than the existing ones. Muktdair-Al-Mukit (2012) study was on the long-run relationship between public expenditure on education and economic Growth in Bangladesh. He used an econometric model and time series data from 1995 to 2009.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain Investigation of the impact of government education spending on economic growth. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of government education spending on economic growth.
Summary
This study was on Investigation of the impact of government education spending on economic growth. Three objectives were raised which included; To reveal the impact of government capital expenditure in education on economic growth, to examine the impact of government recurrent expenditure in education on economic growth, to access the impact of primary, secondary, and tertiary enrollment on economic growth in Nigeria and to analyze the effect of human capital formation on economic growth in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from CBN. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
This demonstrates that any investment (spending) on education is a crucial and critical factor in significantly promoting economic growth especially in the long-term. The channel of impact is indirect in that such an investment (spending) will aid the development of skilled labor and consequently enhance productivity there by leading to improvements in national out and economic growth. As concluded by Mallick, Das and Pradhan (2016), and supported by the results of this study, spending on education positively impacts on education and thus such spending on education can create better human capital which can in return accommodate the use of modern technology in the production process by minimizing huge adoption costs. In the West African countries, such spending on education should be encouraged in the public sector. West African countries should accord more importance to the education sector and accordingly increase its share of total government expenditure on education as a way of improving the various tiers of formal education namely primary, secondary and post-secondary education in the region. This will help enhance the availability of more skilled manpower for the longterm economic growth and development. One way to encourage more government on education and promote economic growth in the region is to allow and encourage regional collaboration amongst the countries as no single country has the means to develop expertise in all knowledge areas. This is imperative given that the West African sub-region has many countries with each country having its own educational structure yet, access to higher education is unevenly distributed while scarce human and financial resources are disproportionately spread throughout the sub-region. This regional collaboration will aid efficient use of limited resources in that it will allow resources to be concentrated, and knowledge to be shared across the countries in the region. And with more advancement in technology, strengthening education training in West Africa is crucial in meeting the needs of growing markets and this may entail more government spending and investment in the education sector.
Recommendation
Government should raise the productive public spending on education but in direction to fulfill the trade labor requirements and to action like an accelerant from degree holders and trade labor. The designing of education policy must be done based on analysis and research
- Government should be careful in managing the public spending on education in a way to increase the skilled labor. Education Policies must be drive based on principle, better is more on state of more is better, Professional schools must be first priority in education policies in country.
- Government should direct the public expenditures on education towards productive sectors that will contribute in improving the standard of living contributing so on economic growth at all.
References
- The Causal Impact of Education on Economic Growth:Evidence from U.S.P. Aghion , L.Boustan C. Hoxby, J. Vandenbussche March 2009 2. Desired and Potential development in the Balkans within a New Global and European Development Framework,Acad. Abdylmenaf Bexheti, SEEU Tetovo ,October 7-th 2013, Skopje 3.
- Human Capital and growth in OECD countries :the role of public expenditures on education;Kristel Buysse 4. Conference of the Nigeria Economic Society.
- Alexander, A.M.O. (1990). Public Finance in a Developing Economy: The Nigerian Case,Enugu: B&F Publications 5.
- Dana Mitra, Ph.D. Associate Professor of Education, State University Pennsylvania‟s Best Investment: The Social and Economic Benefits of Public Education 6.
- Armorer, D. (1996). “Is public expenditure productive?”, Journal of Monetary Economics, 23(2): 177 – 220. 7.
- Barro, R. J. (1990). “Government Spending in a Simple Model of Endogeneous Growth”,The Journal of Political Economy, 98(5): 103-125. 8.
- Chletsos, M. and Kollias, C. (1997). “Testing Wagner’s Law Using Disaggregated Public Expenditure Data in the Case of Greece: 1958- 1993”, Applied Economics, 29: 371-77 9.
- Davidson, S. and Mackinnon, R. (1993) “Military Expenditure and Growth in Less Developed Countries”, Journal of Conflict Resolution, 27, 335-353. 10.
- Devaragan, S.; Swaroop, V. and Zou, H. (1996). “The Composition of Public Expenditure and Economic Growth”, Journal of Monetary Economics, 37: 313-344
- Dickenson, T. D. I. (1996). Economics of Public Sector, Malaysia: Macmillan Press Ltd. 11.
- Engert, E.A. and Hendry, D. (1998). “Public Sector Growth, an Econometric Test of 12.
- Wagner‟s Law”, Economic and Financial Review, 35(3), Central Bank of Nigeria. 13.
- Expenditure and its Impact on Sustainable Economic Growth Middle Eastern Finance and Economics. Euro Journal, Publishing, www.eurojournals.com/MEFE.htm. 14.
- Fan, S. and Rao, N. (2003). “Public Spending in Developing Countries: Trends, 15.
- Determination, and Impact”, EPTD Discussion Paper No. 99, USA. 16.
- Gemmell, N. and Kneller R. (2001). “The Impact of Fiscal Policy on Long Run Growth, 17. European Economy”, London 18.
- Glomm, J.J. and Ravikumar, D.J. (1997). “The Growth of Public Expenditure in Selected Developing Nations: Six Caribbean Countries”, Public Finance/Finances Publique,3(3): 57 – 74 19.
