Human Capital and Knowledge Management
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Proceeding of 1st International Conference on Human Capital and Knowledge Management Human Capital Dynamics of Regional Growth in Nigeria: Dynamic Panel Data Approach Ali Idrisa Gambo*1, Zalina Mohd Daud2, Maizah Hura Ahmad3 1,3Department of Mathematics, Faculty of Science, 2Razak School of Engineering, Univerisiti Teknologi Malaysia. Malaysia (*[email protected])1 Abstract - We used Nigerian regional cross sectional forms the critical mass, in any region allows that region to and time series data of physical and human capital speed up its rate of catching up with the other rich accumulation to run a growth accounting regression regions. It is the major asset that allows poorer regions to captured by an aggregate production function. The tap into the available opportunities that is availed in the results indicated that Human Capital proxied by economy. Public Primary and Secondary Schools enrollments Furthermore, the quantity and quality Human capital are not significant in explaining per capita income proxied by the number and quality of technically levels in certain regions. Equally, they carry the wrong proficient persons in any region or country, makes the signs (negative). The results showed that the initial absorption of the available and new technologies easy and human capital stock has an influence on the GDP per faster,which in turn allows the increase in the production capita growth rate. Regions (Southwest) with a head processes, which increases the regional productivity, thus start school attendance have higher thresholds or improving the regional per capita income, which has a higher technical frontier; higher levels of schooling direct bearing on the level and quality of economic (secondary school) have significant impact on their growth in a region and the country at large. GDP per capita growth rate. While the Northern In generall human capital can be termed as the regions have lower technical frontier; as only the totality of any stock of knowledge or the particular primary school have significant impact on the GDP attributes of the Individual worker or collection of per capita growth. However we find that the federal workers that is acquired through academic institutions financial allocation from the federation accounts to be and, or innately endowed, that enhances and contributes significant across all regions with the exception of the to the worker’s productivity [1]. This impliedly, is the SouthSouth regions, and positive investment in quality of the personnel involved in the economic physical assets of education i.e.number of schools. The productive processes of the general economy and the implication of this is that, physical investment in specialized industries, is one of the major construct that is education (human capital) has a positive effect, the required in modeling the growth processes. challenge is that of student retention in school. Although, a few studies have confirmed the relevance of the growth model to Nigeria using the exogenous growth technique, none has applied the new endogenous Keywords–Dynamic Panel Data, Human Capital, model at the regional level. Majority of these studies have Regional Growth, Nigeria relied on nationally aggregated data, without examining the local spread of economic growth amongst the I. INTRODUCTION components of the Nigerian nation. This study is, therefore, an attempt to contribute to this debate, by using Most macroeconomics treatises and researches aggregate production function approach to estimate an focused on the determinants of growth on cross country endogenous GDP per capita growth rate for the Nigerian studies or inter regional convergence process. This is regions in panel data framework. To achieve this, the paramount given that the regional economic growth is study presents a review of relevant literature on growth somewhat uneven, that is, it is not balanced in approach rate model including the essential elements of the model, or spread. One of the major thrusts upon which economic as well as a few other models used in estimating the growth is hinged is the Human Capital factor as an input determinants of growth rate. The third section explains the in to the growth process and a key determinant of the data used and the estimation procedure. The fourth section subsequent convergence processes. How could the growth discusses the empirical results and the final section processes be moved and converge if there are uneven concludes. patterns or disparities in the basic Human capital structure Broadly the objectives of this study are the in any particular country or any Geographical location. determination of education as an important factor in Within National boundaries, educational or human regional per capita income growth and regional growth capital disparities makes it extremely challenging or dynamics. To achieve these objectives, the study utilized rather difficult for poorer regions to catch up with the rich the educational panel data set of the 36 states in Nigeria regions.Secondly, according to the general literature on during the period 1999-2008. The aim is to shed light and growth empirics, a large mass of Human capital that contribute to the literature on the issues surrounding the HC-1 Proceeding of 1st International Conference on Human Capital and Knowledge Management impact of Human Capital on regional GDP per capita (Lucas 1988) a , where a production function is used to growth in a Sub Saharan African country.As described model the output of the domestic economy, with physical above, this study will examine the extent to which assets, and the stock of Human capital. In this model, the primary and secondary schools (as proxies for Human engine of growth is the Human Capital, as human capital Capital) drive local welfare positions of the citizenry the 6 accumulation raises the level of productivity in terms of Geopolitical Zones in Nigeria. The general economic labour and physical capital. This modeling approach theory postulates that, Human Capital has a positive and “endogenises” the Human capital. significant effect on GDP per capita growth. The endogenous economic growth model and many This paper considers the states grouped into 6 Geo other models of growth rate determination certainly political zones as homogenous regions and the states data helped in explaining the dynamic pattern of economic on public school enrollments as proxy for human capital, growth rate and undoubtedly contributed to the number of schools in the states as a form of physical understanding of the cross country economic growth capital investment in human capital. And the State’s rates. However, despite the wide acceptance of the model, Financial Allocation from the Federation Accounts, there is still divergence of opinions amongst academic because of the fact that most states are dependent upon researchers and policy analysts as to the applicability of the Federal Government Allocations from the Federation the model to emerging/developing economies. Accounts, to run the public services. Central to the In a developing economy, the determination of the development of economic growth, there is the question; nature of the economic growth potential, productivity why do growth rates across countries differ and what levels, and output is a very important task. Because the factors causes these differences. Throughout the modern economic growth and social welfare nexus is a evolution of mainstream growth economics, from Adam fundamental fulcrum of reducing poverty, inflation levels Smith to Schumpeter, policy makers and economists have and stabilizing the monetary exchange rates of the tried to underhand what make some countries rich and domestic economy and currency. The importance of the others poor. Understanding these processes and its Human Capital in the productivity of economic growth dynamics has been the central focus of researches on has been well established and recognized in the economic economic growth disparities. How countries tend to literature. Mincer’s(1974) b seminal work on the converge at a particular point in time on the growth curve determination of individual earnings in particular and the have been the focus on economic growth literature. The labour economics generally introduced human capital to major framework of understanding these processes have the mainstream economics literature. Major seminal been dependent on the construct of capital and works that emphasized the importance human capital in technological accumulation through trade, as necessary the determination of the economic growth and conditionalities for economies to grow fast enough to convergence in the economic literature, seminal works have spurned positive social changes, which have positive like that in [14], [10] [4,5 and 6]. All these studies showed externalities on the welfare conditions of the citizenry. that the accumulation of Human Capital can spurn and The first clear exposition was first expounded by sustain economic growth in the short term and sustain Solow and Swan (Solow-Swan 1965). Solow posited that economic growth in the short run as well as the long run countries economic growth moves up until it reaches growth process and have positive externalities on the steady state point. Implying that countries tend to grow economic growth. until they reach equilibrium position, where they experience declining rates of return on their investments II. METHODOLOGY on the factors of production and thus stagnate. While poor countries in the meantime will endeavour