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THE RELATIONSHIP BETWEEN GOVERNMENT EXPENDITURE ON EDUCATION AND ECONOMIC GROWTH IN NIGERIA.

 Format: MS WORD   Chapters: 1-5

 Pages: 68   Attributes: COMPREHENSIVE RESEARCH

 Amount: 3,000

 Feb 19, 2020 |  10:41 pm |  1176

CHAPTER ONE

1.1 BACKGROUND TO THE STUDY

The ever-increasing importance of education in any economy cannot be overstated. Knowledge has become the most important factor for economic growth and development in the 21st century through its capacity to augment productivity and accelerate a country’s competitive advantage (Porter, 2000). Education is the intellectual laboratory of a nation and the engine that propels economic growth. As such, it is a major concern to many countries of the world including Nigeria. Anyanwu (1997).

Education is an instrument through which the society can be transformed because it equips human resources with knowledge, skills and competencies needed to enhance productivity, foster economic growth, contribute to personal and social development, raises people’s creativity, promotes entrepreneurship and technological advances and reduce social inequality. This is why both developed and developing countries of the world emphasize the enhancement of educational sector. This is because, education is considered as a long term investment that leads to high productivity for a country in the future and Nigeria has no exceptions in developing and raising its educational system in order to be among the top economies to contend with in the world. Strictly speaking, no country can achieve adequate economic growth and development without considerable or significant investment in human capital development.

Education can take place in a formal or informal setting. In Nigeria, during the pre-colonial era, children were taught about their culture, social activities, survival skills and work. Most of these education processes were impacted informally. Western education was introduced into Nigeria in the 1840s and it began in Lagos, Calabar and other coastal cities. These first schools were set up by the Christian missionaries.

The Nigerian educational system has undergone major structural changes over the last 30 years. Before and after the 1960 independence the educational system at the primary and secondary levels reflected the British system, i.e. 6 years of primary education, 5 years secondary and 2 years of higher levels. In 1973, the educational system was updated to the 6-3-3-4 (6 years primary, 3 years junior secondary, 3 years senior secondary and 4 years tertiary education) but this was implemented in 1982 under the National Education Council. Today Education in Nigeria is overseen by the Ministry of Education.

On the other hand, informal education is characterized by apprenticeship system of education in which knowledge or skills are acquired by watching elders in the use of tools and other equipment. Today modern forms of apprenticeship includes acquisition of skills such as tailoring, welding and fabrication, carpentry and auto mechanic amongst others.  The formal educational system is the major institutional mechanism and the most obvious way of developing human capital (Myers, 1994). Human capital theory rests on the assumption that formal education is highly instrumental and necessary to improve the productive capacity of a population. In short, human capital theorists argue that an educated population is a productive population and concludes that investment in human capital will lead to greater economic output. Hence, government expenditure in training the human beings to acquire skills and Knowledge of different types will impact on the economy positively because every human being is a resource for society.

There is increasing empirical evidence that education matters, not only for the personal development, health status, social inclusion and labour market prospects of individual learners, but also for the broader economic performance of countries. As the world has entered the age of the knowledge economy, education and human capital generally play a critical role in driving economic growth in both the world’s most advanced economies and the emerging economies that are currently experiencing profound transformations and periods of rapid growth and development.

Education plays a great and significant role in the economy of a nation, thus educational expenditures are found to constitute a form of investment and it is clear that without a good dose of investment in quality education, it would be difficult to sustain growth with employment essential for poverty reduction. But it has failed to be so in Nigeria as the investment given to educational sector is relatively low and inadequate. Nigeria being the most populated nation in Africa has one of the lowest commitments to education in the continent and by implication in the world.

Education budget as a percentage of total national budgets were 8.43% in 2012 and 8.67% in 2013 which is below United Nations Educational, Scientific and Cultural Organization’s UNESCO‟s recommendation of 26 per cent of the country’s annual budget allocate to educational sector and those of other developing countries including South Africa, Ghana, Cote d‟Ivoire, Kenya and Morocco which had 25.8%, 31%, 30%, 23% and 17.7% respectively for their annual budget for education (Ojewumi and Oladimeji 2016).

Most governments especially in emerging economies are devoting considerable amount of resources to provide educational services with an underlying objective of improving the level, quantity and quality of their human capital for better economic performance. All this is backed by the fundamental argument of the importance of education in promoting growth especially in developed countries (Annabi et al., 2011; Aqil et al., 2014; Yuan and Zhang, 2015).  Spending on education is a leap towards achieving robust human capital development for an economy that seeks competitive advantage in this globalizing world. Therefore, this study seeks to evaluate the impact of education expenditure on economic growth in Nigeria.

1.2 STATEMENT OF RESEARCH PROBLEM

The Nigerian economy is confronted by several economic and social problems with illiteracy being top of the list. This is pitiable for a country that is blessed with tremendous human and material resources. On this problem, education has been seen as a mechanism that can eradicate this nuisance. In Nigeria the rate of illiteracy is very high. Most of the workers are unskilled and they make use of outmoded capital equipments and methods of production. Therefore, their marginal productivity is extremely low and this leads to low real income, low savings, low investment and above all low rate of capital formation. 

The first and possibly one of the greatest challenges confronting the educational system in Nigeria is poor/inadequate funding by federal, state and local government thus leading to poor educational infrastructures, lack or insufficient teaching aids (projectors, computers, laboratories, libraries etc.)

In terms of budgetary appropriations, the educational sector is grossly underfunded. education expenditure as a proportion of Gross Domestic Product (GDP) averaged 0.95 per cent between 1986 and 1989, 1.60 per cent between 1999 and 2003, and 5.88 per cent between 2004 and 2009, it is well below those of other developing countries such as Ghana, Kenya and Seychelles, which in 1960 and 1977, were spending an average of 11.7 and 16.3 per cent (Olaniyi and Adams, 2003) while in 2004 and 2009 were expending an average of 14.4 and 18.5 per cent of their total expenditure on education.  The United Nations recommends a budgetary benchmark of 26 percent for education by government so as to adequately cater for rising educational demands.

The consequences of inadequate funding of educational sector cannot be over emphasized. Strictly speaking, the inadequate funding of education sector which reflects in the area of poor state of the infrastructural facilities, irregularities of teachers‟ remuneration, inadequate staffing, poor salaries to teachers, etc. has resulted to intermittent strikes by some unions including the Academic Staff Union of Universities (ASUU), Academic Staff Union of Polytechnics (ASUP) and Non- Academic Staff Union of Universities.

In addition to these inadequacies, our educational system is plagued with numerous social vices such as examination malpractice, cultism, and corruption. Therefore for meaningful development to take place in the educational sector, the government needs to re-address the issue of funding alongside putting mechanisms in place in other to check and correct corrupt practices within the sector.

 

1.3    RESEARCH QUESTIONS

From the problem statement, it is of paramount importance for this research work to provide useful answers to the following questions.

                               I.            What is the nature of the relationship between Public Education Expenditure and Economic Growth in Nigeria?

                            II.            What has been the trend of Public Educational Expenditure in Nigeria?

                         III.            How important is the educational sector to the economic growth of Nigeria?

                         IV.            What are the problems limiting the growth of the educational sector in Nigeria?

 

1.4     OBJECTIVES OF THE STUDY

The main objective of the study is to evaluate the relationship between government expenditure on education and economic growth in Nigeria.

The Specific objectives of the study are to:   

        i.            To ascertain the causal relationship between education spending and economic growth in Nigeria.

      ii.            Examine the structure and trend of lump sum educational expenditure in Nigeria

 

1.5    RESEARCH HYPOTHESIS

In ensuring a result-oriented research so as to obtain a logical conclusion for the study, the research hypothesis that is drawn will guide in findings and in drawing the research conclusion regarding the impact of education expenditure on economic growth in Nigeria.

 

·         Ho: There is no significant relationship between education expenditure and                    economic growth in Nigeria.

·         H1: There is a significant relationship between education expenditure and economic growth in Nigeria.

 

 

 

1.6     JUSTIFICATION OF THE STUDY

The significance of this study is due to the fact that an economy with actively productive and efficient human resources stands to benefit with economic prosperity and development. Several studies that examined the impact of government spending on education and economic growth revealed that increase in government spending on education could positively contribute to the general well-being of the economy.

This study therefore is important because it reveals the need for adequate investment expenditure on educational sector in order to build optimum human capital through education needed to accelerate economic growth in Nigeria. The  outcome of this study will serve as a guide to policy makers, Education and the National Planning Commission as well as other relevant government department and agencies interested in the development of the education sector in particular and the economy in general. It will also serve as a useful reference for future researchers in this field as it also adds to the already existing literatures on the area.

 

1.7   SCOPE OF THE STUDY

This study would focus its attention on government expenditure on education and economic growth in Nigeria. The study would cover the period of (1985-2015). This study would explore the Nigerian educational sector, the trends of government spending on the sector, the contributions of the sector to the economic growth of the country, the inherent challenges confronting the educational sector. This study will also review relevant theories that explain the link between Educational Expenditure and how it translates to Economic Growth, as well as, reviewing previous empirical works.  This study will also offer recommendation strictly on the findings to effectively tackle the challenges of the educational sector and how it will grow the economy of Nigeria.           

1.8   ORGANIZATION OF THE STUDY

The study is divided into five chapters. Following this introductory chapter which contains; the background to the study, statement of the problem, objectives of the study, research hypothesis, justification of the study, scope of the study and the organization of the study. Chapter two of this study contains the review of literature which consists of conceptual clarification, theoretical literature, empirical reviews of various literature research gap and contribution to knowledge. Section three of this study covers the model specification, description of variables, technique of analysis, sources of data, and software package that will be used in the analysis of data. Section four of this study will encompass the presentation, interpretation, and research results. Section five of this study will contain the summary, conclusion and the policy recommendation. Also, it will include the research references, statistical data table, and output of analysis.

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