ABSTRACT

The study investigated the relative effect of government spending on human capital development in Nigeria for the period 1981-2018 with specific objectives. The specified model was estimated using the Ordinary Least Square with the help ofthe Error Correction Model to determine the level ofimpact that one variable has on the other and the causality between them. While E-views 10 statistical software was employed in computing the result, time series data were obtainedfrom World Bank national accounts data and OECD National Accounts datafiles and the study established that federal Government Capital (CAPEXP) had a negative relationship with human capital development both in the short run and in the long run and was statistically insignificant at 5% level ofsignificance in the short run but significant in the long runperiod, federal Government Recurrent Expenditure (RECEXP) had a positive relationship with human capital development in the short run and in the long run and a strong contributor to human capital development in the long run. The conclusion to be drawn from this study is that Capital expenditure ofNigeria has an insignificant economic effect on human capital development in the presence of other internal and external macroeconomic shocks and the study recommended that Nigeria recurrent expenditure shoidd be such that stimulates growth and not erode capital good in the long-run. However, human capital component of recurrent expenditure should be sustained by taking a cue from Japanese Growth Model while a proper surveillance on capital spending is required in order to boost both human and social capital, experiencesfrom the emerging markets sees human capital as widely adjusted as the engine ofgrowth while social capital is the lubricants.