The Impact of Educational Expenditure on Economic Growth in Nigeria
CHAPTER ONE
Objectives of the Study
The objectives of this work are:
Firstly, to find out the relationship between federal government educational expenditure and economic growth in Nigeria for the period of 1994-2011.
Secondly, to find the impact of federal government educational expenditure on economic growth in Nigeria.
CHAPTER TWO
LITERATURE REVIEW
Theoretical Literature
The concepts of federal government educational expenditure have attracted a lot of comments, opinions and theories from researchers, economists and educational authorities. It is imperative to note some of these theoretical bases for the research and objective of the study.
In this regard, there have been numerous cross-country studies, which have extensively explored whether the attainment of education can contribute significantly to the generation of overall output in economy. On the one hand, these macro studies continued to produce inconsistent and controversial results (Pritchett 1996). For example, Permani (2009), in his study on development strategy in East Asia concluded that this region give Journal of Economics and Sustainable Development greater emphasis to education. His study found that there is positive relationship between education and economic growth in the East Asia. In the meantime, there is bidirectional causality between education and economic growth.
Pradhan (2009), supported this finding and proved that education has high economic value and must be considered as a national capital. He suggested that this capital must be invested and his country, India, must capitalize this human capital development besides the physical capital that contributes to country’s economic growth. Afzal et al. (2010) acknowledged that education has positive long-run and short-run relationships on economic growth in Pakistan. This is in line with findings from Lin (2003), and Tamang (2011) on their studies in Taiwan and India respectively. In addition Baldacci et al. (2004) documentation on 120 developing countries from 1975 – 2000 found that there are positive relationships in the long-run between educational expenses and economic growth.
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
Research Design
The methodology adopted in this research study was multiple Linear Regressions, applying Ordinary Least Squares (OLS) Techniques. The choice of (OLS) Techniques was not made randomly. The choice of (OLS) was because of the following reasons:
- Its technique is simple to understand.
- It posses some interesting properties such as
- Linearity
- Unbiased estimation
- Minimum variance
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF RESULTS
The Empirical Results
Y = GDP = 512976.0 + 0.026284 +EDU
SE = (147747.7) (0.645842)
t* = (2.04069)
r- squared = 0.700104
r – squared adjusted = 0.620390
Durbin Watson = 1.11566
F* = 9.001656
CHAPTER FIVE
SUMMARY OF FINDINGS , CONCLUSION AND RECOMMENDATIONS
Summary of the Findings
The study examines the impact of federal government expenditure on the Gross Domestic Product in Nigerian economy. To carry out this research, annual time series data of federal government education expenditure and their corresponding Gross Domestic Product from 1990 -2008. To analyze the data, linear regression model employing the Ordinary Least Squares (OLS) method was adopted to estimated the parameters.
From the empirical results, it is found that federal government education expenditure has a positive relationship but appears insignificant on its effect on economic growth in Nigeria during the years under analysis.
Secondly, that the percentage of Gross Domestic Product (GDP) that goes to education sector is very low.
Conclusion
The federal government expenditure pattern on the educational sector has being the aim of this study. The federal government expenditure has been related with the corresponding Gross Domestic Product.
Finally, various recommendations have been made which when implemented, would go a long way in boosting the education sector in Nigeria by enhancing the production of ingenious men and overall economic growth and development of the country.
Recommendations of the Findings
This study makes the following recommendations based on the findings:
Firstly, having found out that there is a positive relationship between federal government expenditure and Gross Domestic Product, the federal government should allocate at least 40% of its revenue to the education sector in order to obtain a remarkable result and tremendous growth.
Secondly, government should diversify their source of generating revenue away from oil sector because they have always given insufficient revenue as an excuse not to allocate enough fund to the education sector.
Thirdly, in order to increase enrolment rate, some forms of fees should be abolished in order to encourage parents who cannot afford to send their children to school and also motivate the student.
BIBLIOGRAPHY
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