Physical Capital and Human Capital Essay

Human Capital and Development in Nigeria

Development all around the universe is related to the economic system. The economic system is in portion a societal system of production, exchange, distribution, and ingestion of goods and services of a state. Peoples produce, distribute and devour goods and services and as such they need to be adept, good experienced and be in good status physically and mentally ( Human Capital ) in order for the economic system to develop and thrive. Human Capital development particularly through Health attention and Education are primary factors needed for each and every person in a society to map good and be able to make his/her full potencies, increasing overall productiveness and therefore development.

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Nigeria, a state with a pullulating population of about 140 million constitutes a immense economic system in which each and every person affairs in the development procedure. Every person contributes one manner or the other to the GDP and therefore to development. A high degree of Education in Nigeria will take to high degrees of income and nest eggs thereby increasing investing and therefore productiveness. On the other manus, a low degree of Education in Nigeria will take to low degrees of income, nest eggs and investings which will finally interpret to cut down productiveness. Besides, a state with a high degree of disease will hold a low degree of development unlike a state with a low degree of disease which will hold a far better degree of development. This is because an unhealthy individual will non be able to work to full capacity which will cut down overall productiveness and therefore GDP.

Nigeria besides is a democratic state, where the authorities is formed by the people and for the people. Without Education to some certain extent, the people that will organize the authorities will do incorrect picks and therefore the whole authorities will ever be inefficient and uneffective. Nigeria ‘s economic system is already enduring from misallocation of resources, corruptness, peculation and unethical leading over the old ages. Essential issues that affect the lives of people and the economic system are being dealt with by inefficient authoritiess ; Issues refering the trade-off between efficiency and equity in the production of societal services, wellness attention, instruction, clean imbibing H2O and substructure. Besides, authorities offices are filled with the incorrect people ( structural jobs ) taking to farther inefficiencies which affects the people ‘s ability to heighten themselves both physically and mentally for a better Nigeria.

Section 2 after the Introduction of the paper will cover the Literature Review. Section 3 will be Human Capital and Development Indicators. Section 4 of the paper will cover Nigeria ‘s Human Capital and Development. Section 5 will cover Empirical Investigation on the impact of Human Capital on Economic Development in Nigeria. Section 6 will cover recommendations and Conclusions.

2. Literature Reappraisal

The literature of human capital and development in Nigeria is chiefly centred on the accent of factors that constitute human capital and affect development e.g. instruction, wellness, societal services and enabling environment. A definition of human capital in the work of Ogujuiba and Adeniyi ( 2005 ) province that ; anything lending to the betterment of human productiveness, stimulate resourcefulness and enhance human self-respect and overall quality of human life while polishing attitudes, is an indispensable portion of the human capital of any state. These will include four of import facets viz. the instruction system, wellness services, societal services and good administration. Any betterment of these four of import facets will finally take to development. Akingbade ( 2008 ) asserts that ; for any state to hold economic development within and outside its boundary lines, it has to provide for its citizens via human capital development. Under accomplishment of human capital development in a state leads to underdevelopment of such state via failure to run into national aims and deficiency of optimisation of available potencies and resources. Poor human capital leads to hunger, poorness, disease, brain-drain, optical flight, immense debts, political instability etc thereby haltering the development procedure.

There is a positive relationship between human capital and development. As more and more attempts are made to increase the value of human capital of a society, the more the development degree of that society. “ The more a state has knowing, skilled and resourceful persons, the more the national growing and development of that state. The human capital position of a state will straight act upon and positively correlate with economic and societal indexs such as gross domestic merchandise, income per capita, balance of trade, life anticipation, literacy rate, degree of industrialisation and the quality of infrastructural commissariats. It can besides hold great impact on political stableness, national peace and harmoniousness every bit good as the prevailing ethos. ” ( Ogujuiba and Adeniyi, 2005 ) .

One of the factors that constitute human capital and affect development is instruction. Increase in the degree of choice instruction of Nigerian citizens will increase productiveness and hence development. Lucas ( 1988 ) includes human capital as an extra input in the production of goods, while retaining the other characteristics of the neoclassical growing theoretical account. In the theoretical account, the labour force can roll up human capital, which is so used together with physical capital to bring forth the end product of the economic system. In one version of the theoretical account, human capital is acquired through clip spent in an ( non-productive ) educational procedure, presenting a tradeoff for workers between using clip to bring forth end product and utilizing it to derive farther human capital that will increase their fringy productiveness when working in subsequent periods.

In another version of the theoretical account, human capital is gained by the workers through on-the-job preparation, and so the clip employed working additions their productiveness subsequently on. A recent research on the impact of human capital on economic development carried out by Ogujuiba and Adeniyi shows a more robust consequence utilizing informations from the Central Bank of Nigeria one-year study 1970 – 2003. Their findings were that instruction degree indicated via primary to third instruction registration in Nigeria has a positive impact on Nigeria ‘s economic development. Even though the relationship between economic development and third instruction registration is positive, it is besides found to be weak. This is likely associated to the decay in most of the third establishments, relentless work stoppages and break of academic activities, unequal support and weak substructure in the educational sector of Nigeria.

Becker ( 1992 ) provides the most direct nexus between instruction and economic growing: lower birthrate provides an chance to increase human capital, which in bend helps prolong lower birthrate. The more educated the parents are, the more likely they go for smaller households because non merely do they hold a higher chance cost of clip, but besides they can learn their kids more efficaciously. High degrees of human capital cause low birthrate and high investing in human capital.

Other factors that constitute human capital and affect development are wellness services, societal services and good administration.

Health services include all the necessary demand of a citizen when he/she is ill. Health services can be reflected by several indexs such as life anticipation and infant mortality. Barro and Sala-i-Martin ( 1995, Ch.12 ) , among many others, have besides included life anticipation and infant mortality in the growing arrested developments as a placeholder of touchable human capital, complementing the intangible human capital steps derived from school inputs or cognitive trials considered ; their determination is that life anticipation has a strong, positive relation with growing. This means that Health services which help an person to run at his/her full capacity increases overall productiveness and hence growing and development.

When there is good administration, there will be societal services and besides, human capital will be increased thereby taking to development. But Nigeria, a state that relies merely on oil grosss lacks good administration. Barton ( 2003 ) points out that due to miss of good administration in Nigeria, outgo outstripped gross, big internal budget shortages mounted and grandiose external debts appeared. He besides added that a general deficiency of answerability and transparence, two critical factors for keeping good administration was missing in Nigeria. These jobs besides eroded overall credibleness and drastically undermined investor assurance. Nigeria ‘s international image is instead hapless. In a credit-risk evaluation published in the Economist in1994, Nigeria was ranked 3rd to last, after Iraq and Russia ( The Economist, 1994 ) .

In position of our subject, the literature has been focused chiefly on the relationship that runs from human capital to development. In my ain position, the relationship can besides run from development to human capital. For illustration, Nigeria with its abundant natural resources can bask economic development via international trade additions. Nigeria in coaction with transnational corporations can work its natural resources and sell to the universe market. These additions from the planetary market can be channelled to assorted sectors of the economic system therefore heightening growing and development.

But all this will be possible if and merely if there is good administration in Nigeria which will apportion resources expeditiously, implement the right policies and take the assorted sectors of the economic system in the right way. With these additions to merchandise, which lead to development, human capital can be revisited to heighten greater development. On the other manus besides, high degrees of human capital can increase grosss via increasing end product and pulling foreign direct investings. For illustration the instance of India ; where their authoritiess have spent a batch on their people to achieve Information Technology know-how which attracts companies in the United States to outsource some of their IT work from India. Nigeria is a state with a high population therefore with a high human capital potency. With the necessary administration and committedness, Nigeria can be rich in human capital thereby taking to its development.

3. Human Capital and Development Indicator
Human Development Index

The Human Development Index ( HDI ) provides a composite step of three dimensions of human development: life a long and healthy life ( measured by life anticipation ) , being educated ( measured by grownup literacy and registration at the primary, secondary and third degree ) and holding a nice criterion of life ( measured by buying power para, PPP, income ) . All these factors affect the end product degree of a state. Harmonizing to the 2007/2008 human development Report, Iceland is ranked 1st while Sierra Leone is ranked 177th in the 2005 homo development Index. The HDI for Nigeria is 0.470, which gives the state a rank of 158th out of 177 states. This clearly shows that Iceland is more developed than Nigeria because of the difference in human capital.

Table 1 below shows Nigeria ‘s Human development index for 2005.

Table 1: Nigeria ‘s human development index 2005

HDI value

Life anticipation at birth

( old ages )

Adult literacy rate

( % ages 15 and older )

Combined primary, secondary and third gross registration ratio

( % )
GDP per capita

( PPP US $ )

1. Iceland ( 0.968 )

1. Japan ( 82.3 )

1. Georgia ( 100.0 )

1. Australia ( 113.0 )

1. Luxembourg ( 60,228 )

156. Senegal ( 0.499 )

163. Botswana ( 48.1 )

102. Algeria ( 69.9 )

136. Nepal ( 58.1 )

158. Rwanda ( 1,206 )

157. Eritrea ( 0.483 )

164. Cote d’Ivoire ( 47.4 )

103. Tanzania ( United Republic of ) ( 69.4 )

137. Equatorial Guinea ( 58.1 )

159. Benin ( 1,141 )

158. Nigeria ( 0.470 )
165. Nigeria ( 46.5 )
104. Nigeria ( 69.1 )
138. Nigeria ( 56.2 )
160. Nigeria ( 1,128 )
159. Tanzania ( United Republic of ) ( 0.467 )

166. Malawi ( 46.3 )

105. Guatemala ( 69.1 )

139. Bangladesh ( 56.0 )

161. Eritrea ( 1,109 )

160. Guinea ( 0.456 )

167. Guinea-Bissau ( 45.8 )

106. Lao People ‘s Democratic Republic ( 68.7 )

140. Yemen ( 55.2 )

162. Ethiopia ( 1,055 )

177. Sierra Leone ( 0.336 )

177. Zambia ( 40.5 )

139. Burkina Faso ( 23.6 )

172. Niger ( 22.7 )

174. Malawi ( 667 )

Beginning: UNDP

Human Development Index Trends

The human development index tendencies tell an of import narrative of how human development alterations over clip. Since the mid-1970s about all parts have been increasingly increasing their HDI mark ( Figure 2 ) . East Asia and South Asia have accelerated advancement since 1990. Central and Eastern Europe and the Commonwealth of Independent States ( CIS ) , following a ruinous diminution in the first half of the 1990s, has besides recovered to the degree before the reversal. The major exclusion is sub-Saharan Africa. Since 1990 it has stagnated, partially because of economic reversal but chiefly because of the ruinous consequence of HIV/AIDS on life anticipation.

Figure 2: Tendencies

Nigeria ‘s human development growing is slow compared to other parts in the universe and this besides translates to decelerate development. This is perchance due to factors that hinder the three dimensions that the HDI gaining controls ( life anticipation, grownup literacy and registration at the primary, secondary and third degree and buying power para, PPP, income ) . Factors may include: high degree of diseases, hapless wellness services, misallocation of resources, bad administration, hapless substructure, and hapless educational systems.

4. Nigeria ‘s Human Capital and Development

Nigeria, a state with a pullulating population of over 140 million people with an oil dependent economic system has had a worsening mean economic growing over the old ages. This is in portion due to hapless human capital. Several sectors of the Nigerian economic system have suffered vastly due to hapless human capital. Poor human capital has its annihilating consequence on the development of any economic system. Low income, hungriness, poorness, disease, brain-drain, optical flight, immense debts and political instability are all the branchings of hapless human capital.

Nigeria ‘s high population does non bespeak high human capital value because merely a few people are opportune to hold quality instruction, wellness services and other homo development services. “ The value of the human capital plus of a state is a map of measure, quality every bit good as the operating environment ” ( Akingbade, 2008 ) . High population merely indicates high potency for human capital development. When significant inputs and attempts are made to promote these potencies that is when high population translate to high human capital value. Among the inputs are ; a good educational system, good wellness systems and a contributing operating environment. Nigeria lacks both inputs and attempts needed to promote its high human capital potencies. For case, Nigeria is far more endowed in mineral resources and human population than Japan, Sweden or Singapore ; yet it comes nowhere near these states in technological promotion and in economic and societal development. “ What makes the difference is human capital, its development, effectual battle and use. ” ( Akingbade, 2008 ) .

In footings of the educational systems of Nigeria, there are a batch of authorities owned primary and secondary schools. Besides, there are a batch of Universities in Nigeria but the job is the sum of resources invested in these countries is deficient. Due to the few resources allocated to the educational sector, choice instruction becomes hard to achieve. As Nigeria ‘s population addition in a geometrical ratio, the resources allocated to instruction is increasing easy or sometimes diminishing. This misallocation of resources consequences to a batch of force per unit area on bing substructure taking to depreciation. Huge measures of people pass out from primary, secondary schools and the Universities with small or no cognition and no occupations to make. The multitudes in Nigeria are the 1s largely deprived of quality instruction and wellness services.

Due to the want of quality instruction, there are low incomes and rewards. These low incomes and rewards drive off already bing individuals with high human capital to foreign states in hunt of a better grazing land ( encephalon drain ) . This encephalon drain leads to deficient professionals in Nigeria doing overall productiveness to fall. The state is left with a batch of people with small or no utile cognition in footings of increasing overall productiveness. It is in the thick of all this that people are meant to elect a leader they do n’t cognize approximately. The multitudes deprived of quality instruction do n’t cognize their rights, the fundamental law, and other related affairs that affect their societal good being now and in the close hereafter. Inefficient and uneffective leaders are put in topographic point to go on misallocating resources thereby declining the state of affairs. More multitudes become hapless and therefore cut down the overall productiveness of Nigeria.

Another portion of the job is hapless or unequal wellness installations, substructure and professionals. The bing wellness installations and substructure can non provide for the pullulating population and therefore a batch of people are deprived quality wellness attention. Due to inadequate wellness installations, a batch of people die from diseases that are curable thereby cut downing Nigeria ‘s high human capital development potency. Besides, due to low incomes and rewards explained earlier, Nigerian physicians, nurses and wellness officers migrate to developed states for a better life. These insufficiencies in wellness installations, substructure and professionals undermine the wellness sector and therefore lead to cut down overall productiveness of the state.

The Human Poverty Index ( HPI-1 ) measures terrible want in wellness by the proportion of people who are non expected to last age 40. Education is measured by the grownup illiteracy rate. And a nice criterion of life is measured by the unweighted norm of people without entree to an improved H2O beginning and the proportion of kids under age 5 who are scraggy for their age. The Human Poverty Index ( HPI-1 ) value for Nigeria is 37.3 which rank Nigeria 80th among 108 developing states.

Table 2 shows the values for these variables for Nigeria and compares them to other states.

Table 2: Selected indexs of human poorness for Nigeria

Human Poverty Index ( HPI-1 ) 2004

Probability of non lasting past age 40 ( % ) 2004

Adult illiteracy rate ( % ages 15 and older ) 2004

Peoples without entree to an improved H2O beginning ( % ) 2004

Children underweight for age ( % ages 0-5 ) 2004

1. Barbados ( 3.0 )

1. Iceland ( 1.4 )

1. Estonia ( 0.2 )

1. Thailand ( 1 )

1. Czech Republic ( 1 )

78. Rwanda ( 36.5 )

158. Uganda ( 38.5 )

127. Algeria ( 30.1 )

114. Mali ( 50 )

108. Philippines ( 28 )

79. Malawi ( 36.7 )

159. Cote d’Ivoire ( 38.6 )

128. Tanzania ( United Republic of ) ( 30.6 )

115. Guinea ( 50 )

109. Indonesia ( 28 )

80. Nigeria ( 37.3 )
160. Nigeria ( 39.0 )
129. Nigeria ( 30.9 )
116. Nigeria ( 52 )
110. Nigeria ( 29 )
81. Burundi ( 37.6 )

161. Guinea-Bissau ( 40.5 )

130. Guatemala ( 30.9 )

117. Fiji ( 53 )

111. Sri Lanka ( 29 )

82. Yemen ( 38.0 )

162. Congo ( Democratic Republic of the ) ( 41.1 )

131. Lao People ‘s Democratic Republic ( 31.3 )

118. Congo ( Democratic Republic of the ) ( 54 )

112. Maldives ( 30 )

108. Chad ( 56.9 )

173. Zimbabwe ( 57.4 )

164. Burkina Faso ( 76.4 )

125. Ethiopia ( 78 )

134. Bangladesh ( 48 )

Beginning: UNDP

Nigeria, a state with abundant natural resources and high population can put vastly in human capital development in its citizens to bask increased productiveness. With the huge Oil grosss, Nigeria can impart sufficient resources to supplying chances for all citizens to develop to their fullest potencies through instruction, preparation and motive every bit good as making the enabling environment for everyone to take part to the full in national development. These will include outgos in educational and preparation establishments, wellness installations, adult functional literacy, vocational and accomplishments acquisition programmes, information and communicating engineerings ( ICT ) every bit good as in research and development. With all these investings, foreign direct investing will increase ( e.g. Information Technology undertaking outsourcing of American companies from India ) and grosss from within and outside the state will besides increase.

5. Recommendations and Decision

Despite all the hapless instruction system, wellness services, societal services and administration system in Nigeria, there are possible recommendations that will assist cut down the tremendous impact on the economic system. Each and every system stated supra has its impact on human capital and therefore the development of a state and as such have different recommendations.

Get downing with the hapless instruction system in Nigeria, one must see the resources allocated to this sector before doing any recommendation. First of wholly, the instructors available in schools and Universities sing the figure of pupils are truly unequal. Nowadays, everyone wants to be rich, no 1 wants to assist in societal development. Our values have changed and we have become more self centered. So our values need to be changed back via value re-orientation accommodating our societal values. Students need to understand what is at interest in the educational system and be encouraged to be instructors. Quality instructors need to be produced. “ No instruction system can lift above the quality of its instructors and no state can lift above the degree of its instruction system ” ( Akingbade, 2008 ) . When there is an addition in the figure of quality instructors, the ratio of instructors to pupils will be efficient for quality instruction.

The Nigerian public is increasing at a geometrical ratio while the figure of quality schools and University is slightly dead. For this ground, there need to be more schools for the pullulating public so as to hold a well little ratio of instructors to pupils in a well built substructure conducive for larning. Besides, the educational system needs to undergo reforms to be good equipped with the challenges of the extremely advanced planetary economic system. The integrating of the usage of computing machines in all domains of the instruction system needs to be emphasized because the universe is continuously progressing in computing machine engineering. Teachers/Lecturers wages and improved on the job conditions in educational establishments should be given high precedence by the Government. Regular closing of third establishments due to work stoppages, cult activities, and surpluss of pupil brotherhoods, etc. should be addressed by the relevant governments. The attempt of Government on increasing primary school registration through the free compulsory Universal Basic Education should be sustained. This could besides be complemented by affecting private and spiritual organisations.

A­A­A­Another job that needs pressing attending is the issue of hapless wellness services. If the whole state is ill, the whole state stops working. And as such here are possible recommendations for the Nigerian wellness sector ; First and foremost is strategizing assorted ways to retain our medical physicians and nurses to cut down encephalon drain. Due to hapless salary given to these workers, they tend to migrate to other states. The wages of physicians and nurses need to be reconsidered in footings of the existent province of the economic system. Other options to well paid wages can be more benefits to the workers to function as an inducement to remain in Nigeria. For illustration policy can be created to state if you are a physician in Nigeria, you are entitled to a house and two autos ; one for you and one for your married woman. Another recommendation for the Nigerian wellness sector is the proviso of adequate installations and substructure to the of all time turning public.

The authorities needs to increase its outgo in the wellness sector as the population increases. More infirmaries need to be constructed and more medical equipments need to be installed in these new infirmaries. Good infirmary roads need to be constructed in order to hold easy entree. The proviso of more ambulances is truly a important issue in instance of exigencies. Besides, Information and Communication Technology need to be integrated to the Nigerian wellness sector so as to increase efficiency. Our physicians and nurses need to be updated ever via the cyberspace and as such they need to be familiar with computing machines and the cyberspace for better public presentation.

All these good infirmaries with many physicians and nurses need non to be deprived for the multitudes ; it should be accessed by all because everyone affairs in the development procedure. Last, the most of import issue after acquiring all the physicians, nurses, equipment and substructure is the care facet. All these infirmaries need sufficient care to last for a long clip and as such a qualitative care company trusted by the authorities should be given the exclusive undertaking. If one care company lacks the capacity to keep a batch of infirmaries, other qualitative care companies can besides be in topographic point. With two or more care companies, there will be competition between them and monetary value of care will fall.

Good administration in Nigeria can be indicated via assorted factors and one of the factors is societal service. When there is good administration, there will be qualitative and quantitative societal services for the people thereby heightening human capital. But on the other manus, when there is bad administration, there will be white elephant undertakings taking to few societal services. Good administration in Nigeria should be encouraged via contending corruptness and puting up effectual and efficient cheque and balance system. Every person that is given duty in office should be held accountable for his/her actions.

Besides, authorities outgo relation to its gross should be monitored to heighten good administration. Another recommendation for good administration is doing all authorities determinations transparent to the people. Keeping people in the cringle of authorities determinations cut down the chance of work stoppages and civil agitation. Strategizing good administration for Nigeria will greatly better Nigeria ‘s image to the international community thereby encouraging possible investors to put in the Nigerian economic system. As investors invest and the authorities provides more societal services for the people, human capital is vastly increased taking to economic development.

In a nutshell, all recommendations should be posed at all possible factors that constitute human capital and affect development ; educational systems, wellness services, societal services and administration. It is these factors that turn high human capital potency into human capital value and it is these factors that help a state develop both socially and economically.


We have seen despite the fact that Nigeria has been vastly blessed with natural resources and high human capital development potencies, it still fails to go one of the taking economic and technological giants in the universe. Nigeria in the Human Poverty Index ranks 80th among 108 developing states ; intending a batch of the multitudes in Nigeria are hapless, deprived of wellness attention and quality instruction and therefore interpret into low or no development.

Besides, Nigeria in the Human Development Index ranks 158th out of 177 states demoing that there is low life anticipation, grownup literacy, buying power para and registration at primary, secondary and third degree. Several consequences of assorted research points out the fact that all the factors mentioned above affect the value of human capital of a state and its development. And as such, all these factors need to be given the outmost importance in policy devising. With the globalised economic system going more competitory and advanced in footings of engineering, Nigeria, a state with all that it needs to be on top should do the best usage of what it has in order to hold the best there is in this planetary economic system.


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