European Journal of Globalization and Development Research, Vol. 6, No. 1, 2012
2220-7414
European Journal of ISSN
Globalization
and Development Research
Education and
Economic Growth in
Nigeria: A
Comparative
Analytical Approach
Anthonia T. Odeleye.
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European Journal of Globalization and Development Research, Vol. 5, No. 1, 2012
Education and Economic Growth in Nigeria:
A Comparative Analytical Approach
Anthonia T. Odeleye *
Abstract
For decades, the Nigerian economy has been plagued by several socio-economic problems with
poverty chairing the list. This is quite ironic for a country that is endowed with vast natural and
human resources. In the quest to finding plausible solutions to the problems faced by the country,
studies have shown education, as the leading instrument for promoting economic growth.
This paper examines the impact of education on economic growth using primary and secondary
annual data ranging from 1985 to 2007. The findings show that only recurrent expenditure has
significant effects on economic growth as the academic qualifications of teachers also have
significant impact on students’ academic performance. Among other, this paper recommends that the
government should increase its expenditure on education especially, the capital expenditure, while a
good salary scheme with other incentives for teachers’ motivation should be implemented.
Keywords: Capital formation, recurrent expenditure, economic growth gross domestic product,
Nigeria.
*
[Department of Economics, Caleb University, Imota, Lagos, Nigeria], [antileye@yahoo.com, antileye@gmail.com],
[+2348033618174]
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European Journal of Globalization and Development Research, Vol. 5, No. 1, 2012
education as a leading instrument for promoting
1.0 INTRODUCTION
Education, as a key component of human capital
formation is recognized as being vital in increasing the
productive capacity of people. Education, especially at
economic growth. For several decades, United Nations
has placed great emphasis on primary and, more
recently, secondary education.
the higher level, contributes directly to economic
However, the educational sector in Nigeria is plagued
growth by making individual workers more productive
by many problems. This is attributed to the attention
and leading to the creation of knowledge, ideas, and
given to education by the Nigerian governments (both
technological innovation. The effect of education on
past and present) is relatively low. Even many years
technological innovation is direct following the
after independence, it is stunning to know that the adult
Romer/Solow growth theory framework. An investment
illiteracy rate is still at 74% (Ibidapo-Obe, 2007) and
in education is beneficial to the society, both at micro
the gross enrollment rate is also low. The minimum
and macro levels and affects the system both directly
amount to be spent by a country on education as stated
and indirectly effect. Education is basic to development
by the United Nations (UN) is 26% of the country’s
and is also regarded as an instrument through which the
annual budget. Ironically, according to the data by
society can be transformed. As a salient factor in
Herbert (2002) from 1977-1998, the total education
transition
human
budget represented an average of 9.7% of total
resources with the needed knowledge, skills and
government expenditures, while its percentage share of
competencies, which would make them functional, and
the GDP from 1991-2009 has maintained a value of
contribute to the all-round development of the nation. It
0.85%. Its highest value was 5.11 % in 1981 and its
does not only help to supply the essential human capital
lowest was 0.85% in 1991 (UNESCO, 2011). Looking
which is a necessary condition for sustainable economic
at the statistics above, it is clear that expenditure on
growth but it is also a key to poverty reduction and a
education is still very low.
programme,
education
equips
major vehicle for promoting equity, fairness and social
justice (Todaro, 2007).
Another pertinent issue in the Nigerian educational
sector is that of teacher education. The basic problems
The Nigerian economy has been plagued by several
reported by surveys carried out in various research in
economic and social problems with mass poverty being
Nigeria have shown the discrepancy between the
at the top of the list. This is quite ironic for a country
demand for teachers and the supply for teachers, and
that is endowed with vast natural and human resources.
that teachers fail to meet the minimum requirement as
In the quest to finding plausible solutions to the
stated by the National Policy For Education. This is due
problems faced by the country, studies have shown
to lack of incentives, brain-drain and lack of motivation
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European Journal of Globalization and Development Research, Vol. 5, No. 1, 2012
(Ibidapo-Obe, 2007). According to Dike (2002), he
methodological approaches emanating from adopted
noted that the Federal Government reported that the
data.
falling standard of education in Nigeria is caused by
“acute shortage of qualified teachers in the primary
2. LITERATURE REVIEW
school level.” It was reported by the same author, that
Investment in education is fast becoming very
about 23 percent of the over 400,000 teachers employed
significant because of new challenges being faced in the
in the nation’s primary schools do not possess the
Nigerian environment and the discovery of education as
Teachers’ Grade Two Certificate, even when the
an impetus to economic growth and development.
Nigerian Certificate of Education (NCE) is the
Various researchers (Bakare, 2006; Olaniyan and
minimum educational requirement one should possess
Okemakinde, 2008) have explored the concept of
to teach in the nation’s primary schools. It is no wonder
human capital investment and have tried to empirically
then that Nigerian students do not generally perform
trace the linkage between education and economic
well in most (external) public examinations. Almost
growth.
every year, the Chief Examiners Reports (CER) for the
West African Examinations Council (WAEC) and the
National Examinations Council (NECO) highlight the
abysmal poor performance of students at the Senior
Secondary School Certificate Examinations.
Bakare (2006) investigated the growth implications of
human capital investment in Nigeria using vector
autoregressive error corrections mechanism. The study
revealed that there is a significant functional and
institutional relationship between the investments in
Added to this poor performance in those public
human capital and economic growth in Nigeria since
examinations, is the widespread vice of examination
1% fall in human capital investment led to a 48.1% fall
malpractice, which is indicative of poor and inadequate
in the rate of growth in gross domestic output between
preparation for examination. When students have not
1970 and 2000.
read widely and thoroughly and have not been wellprepared for examinations, the tendency is to turn to
short-cuts and sharp practices in order to pass
examinations.
Olaniyan and Okemakinde (2008) carried out a research
on the implications of educational development on
human capital. They concluded that Nigeria is
confronted by most of the problems that could limit the
The above mentioned problems constitute the basis for
capacity of expansion in education to stimulate growth
this research work which aims at examining the impact
and development such as under-employment, low
of government expenditure and teachers’ educational
absorptive capacity, and shortage of professionals,
qualifications on the educational sector using different
regional imbalances and brain-drain. The persistence of
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European Journal of Globalization and Development Research, Vol. 5, No. 1, 2012
many of these problems in spite of the various policy
capital are statistically significant (except labour force)
formulations and responses points to the need for a
in the Nigerian economy. The findings have a strong
more focused, responsive, functional and qualitative
implication on educational policy in Nigeria. The study
educational system.
seems to suggest that a concerted effort should be made
Ararat (2007) analyses the role and impact of education
on economic growth in the two largest economies of the
former Soviet Bloc, namely, the Russian Federation and
by policy makers to encourage increase in educational
investment in order to accelerate growth which would
engender economic development.
Ukraine. The study attempts to estimate the significance
Nurudeen
of different educational levels, including secondary and
disaggregated analysis on government expenditure and
tertiary education, for initiating substantial economic
economic growth in Nigeria. Their analysis concluded
growth that now takes place in the two countries. This
that there was no significant relationship between
study estimates the model of endogenous economic
expenditure on education and economic growth in
growth and the system of linear and log-linear equations
Nigeria. However they suggested that government
that account for different time lags in the possible
should increase expenditure in the educational sector
impact of higher education on economic growth. The
since it would increase productivity and economic
model estimation shows that there is no significant
growth.
impact of educational attainment on economic growth.
The results from the system equations indicate that an
increase in access of population to higher education
brings positive results for the per capita GDP growth in
the long term.
and
Usman
(2010)
carried
out
a
In addition, Lawal and Wahab (2011), “Education and
Economic
Growth:
The
Nigerian
Experience”
concluded that the achievement of rapid economic
growth through boosting and rapid investment in
education is a decision in a right direction as much as it
Dauda (2009) carried out an empirical investigation on
would not affect the average cost of education or
the relationship between investment in education and
reducing the quality of education. Nigerian economy
economic growth in Nigeria, using annual time series
would benefit greatly from an increase in government
data from 1977 to 2007. The paper employs Johansen
expenditure that goes to the education sector even if it
co-integration
comes at the expense of a reduction in other aspects of
technique
and
error
correction
methodology. Empirical results indicate that there is,
investment.
indeed a long-run relationship between investment in
education and economic growth. All the variables used
including gross fixed capital formation and educational
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European Journal of Globalization and Development Research, Vol. 5, No. 1, 2012
3.
Recurrent and capital expenditures on education and
METHODOLOGY
This research employed primary and secondary data for
its empirical analysis. The primary data are used to
analyze
the
impact
of
teachers’
educational
qualification on students’ academic performance and
the secondary data examine the impact of government
expenditure
on
the
quality
of
education,
and
consequently economic growth. . The primary data
were gotten from questionnaires that were distributed to
a number of respondents within the Ipaja area of Agege
gross capital formation are substituted with Ak α as y is
represented by real gross domestic product. Thus,
equation (1) is rewritten as:
RGDPt = β0 + β1REt +β2CEt + β3GCFt + µ t
(2)
Where:
RGDPt = Real Gross Domestic Product for year t.
REt = Government Recurrent Expenditure on Education
Sector
in Lagos State. A total of 146 questionnaires were
administered in sampled private primary schools. The
CEt = Government Capital Expenditure on Education
reason is two folds: UNESCO lays strong emphasis on
Sector
Universal Basic Education, which is the bedrock of any
GCFt = Gross Capital Formation
educational pursuit and the relevance of the private
sector on education. On the other hand, the inferential
statistical analysis adopts the regression analysis using
β0, β1, β2, β3= Parameters
µ t = Disturbance error term.
the ordinary least square (OLS) technique and the
secondary data were gotten from the statistical bulletin
of the Central Bank of Nigeria (CBN, 2010).
Our model adapted Solow growth model. The original
version of the Solow growth model is stated as:
y =Ak α ……………………………………… (1)
4. PRESENTATION
AND
DISCUSSION
OF
RESULTS
4.1 Descriptive Analysis of the Survey
This section solely presents the frequency distributions
of the responses to the questionnaires designed to
survey respondents’ opinions.
This model states that output per worker is a function
that depends on the amount of capital- physical or
human- per worker; the more capital invested in each
worker, the more output he will produce.
Table 4.1 depicts the distribution of the respondents by
their primary places of appointments. St. Bernadette
Nursery and Primary School, Gowon Estate, Ipaja,
Lagos State (50 or 34.2%), Sameti Favoured Nursery &
Primary School, Gowon Estate, Ipaja, Lagos State (8 or
5.5%), Excel Immaculate Nursery and Primary School,
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Gowon Estate, Ipaja, Lagos State (10 or 6.8%), Renics
received any form of incentives. 78% of the total
Nursery and Primary School, Gowon Estate, Ipaja,
respondents indicated that they never received financial
Lagos State (42 or 28.8%), De Paradise Nursery and
support from their institution to further their education
Primary School, Gowon Estate, Ipaja, Lagos State (6 or
while 21% of all said they were financially supported.
4.1%), Toamy Hills Nursery and Primary School, Ipaja,
18.1%
Lagos State (10 or 6.8%), Bambino Nursery and
training/seminars
Primary School, Gowon Estate, Ipaja, Lagos State (4 or
training/seminars for teachers once every three months
2.7%), Little Lights Nursery and Primary School,
and 9.7% had a yearly attendance. 98.6% of the valid
Gowon Estate, Ipaja, Lagos State (4 or 2.7%), Laspo
responses are of the opinion that undergoing series of
Nursery and Primary School, Gowon Estate, Ipaja,
training would definitely enhance teaching skills. Less
Lagos State (2 or 1.4%).
than 2% are of contrary opinion. 41.1% (60 teachers)
Our survey shows that at the commencement of the
have so far taught less than four subjects with a total of
teachers’
total
42 (or 28.7%) teaching more than four but less than
respondents held the School Certificate with about 50%
nine subjects. Of the respondents, 30.1% have taught
holding various diplomas. Of the total, exactly 28.8%
over nine subjects.
are degree holders. 5.5% of the total respondents held
Also, the survey indicates that the subjects so far taught
the School Certificate with 15.1% holding various
by over 90% of the teachers are actually related to their
diplomas. 63% are first degree holders while 16.5%
professional
have advanced into the postgraduate level. This shows
institutions, 94% of the sampled teachers were provided
that 79.5% of the teachers possess the
minimum
with teaching aids while the remaining 6% were not.
qualification required by the National Policy for
70% of the sampled teachers were provided with
Education. It was discovered that less than 10% of the
adequate teaching aids. 22% reported fair adequacy,
respondents are fresh
while
while others indicated the inadequacy of the necessary
approximately 33% are well over ten years in this job.
teaching aids. 97.2% of the valid responses are in
Also, 33% have various years of experience; ranging
agreement that the teaching aids provided by the
between one and five. About a quarter of the population
various institutions improved pupils' understanding.
has between 5 and 10 years experience of teaching
According to the teachers, over 52.8% of the students
career.
performed excellently, while 47.2% agreed that the
Moreover, well over 95% of the total respondents
students’ academic performance over the past year was
indicated that they received encouragement from their
simply good. Also, all the respondents agreed that
teaching
career,
21.9%
of
the
in this profession
of
the
valid
monthly
disciplines.
respondents
attended
as
attended
65.3%
Among
the
sampled
institutions to further their education. 4.1% never
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European Journal of Globalization and Development Research, Vol. 5, No. 1, 2012
teachers' educational qualifications have impacts on the
important to ascertain the stationarity properties of the
students' academic performance.
series, as regressing non-stationary variables could
In addition, 95% of the respondents confirmed that their
result to spurious regression. The table below shows the
academic qualifications reflect on their students’
result of the unit root test, conducted using the
performance as the remaining 5% did not. 13.7%
Augmented Dickey Fuller (ADF).
indicated they were never rewarded or motivated for
The table 4.3.1 shows that all the variables are
displaying good teaching skills. A total of 86.3% of the
differenced series, as they are all found not to be
respondents had one time or the other been rewarded or
stationary at levels at 5% critical level.
motivated for displaying good teaching skills
4.3.2 Ordinary Least Square Estimation Results.
4.2 HYPOTHESIS TESTING
The model for this study, having uncovered that they
H10: Teacher educational qualification does not affect
are differenced series is remodeled and specified below:
students’ academic performance.
H11:
(1)
Teacher educational qualification affects
Where: ∆ = change in
students’ academic performance.
lrgdp = Log of Real Gross domestic Product
DECISION
lce = Log of Capital Expenditure on Education
Since P value (Asymp. Sig = 0.00) is less than Alpha
lre = Log of Recurrent expenditure on Education
Value (α= 0.05), we reject the null hypothesis (H0) and
lgcf =Log of Gross Capital Formation.
accept the alternative Hypothesis (H1).The conclusion
The results of the estimation are presented in Table
therefore is that teachers’ educational qualification
4.3.2:
affects their students’ academic performance. Overall,
our survey shows that teacher educational qualification
lrgdp= 8.80 – 0.17ce+ 0.32re+ 0.34gcf
(2)
has impacts on students’ academic performance. Also,
the survey shows that 63% of the teachers have more
4.3.3 INTERPRETATION
than the required qualifications as stated by the National
Having found the first difference of the variables in the
Policy for Education; while 95% of them believe that
model, the model then becomes a short run model,
their academic qualifications are good reasons why
owing to the existence of a lagged term in the process
their students are performing well.
of differencing the series, this therefore, makes the
4.3 UNIT ROOT TEST
model a dynamic short run model.
Before estimating equation 2 having ascertained that
While keeping the above in mind, the result above
our model met the economic criteria, it is expedient and
shows a positive relationship between Gross Capital
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Table 4.1 Number of Respondents in the Schools.
Frequency
%
Valid %
Cumulative %
50
8
10
42
6
10
4
4
2
136
10
34.2
5.5
6.8
28.8
4.1
6.8
2.7
2.7
1.4
93.2
6.8
36.8
5.9
7.4
30.9
4.4
7.4
2.9
2.9
1.5
100.0
-
36.8
42.6
50.0
80.9
85.3
92.6
95.6
98.5
100.0
100
-
146
100.0
-
-
School
St. Bernadette Nursery & Pry Sch, Ipaja
Sameti Favoured Nursery & Pry Sch, Ipaja
Excel Immaculate Nursery & Pry Sch, Ipaja
Renics Schools Nursery & Pry Sch, Ipaja
De Paradise Nursery & Pry Sch, Ipaja
Toamy Hills Nursery & Pry Sch, Ipaja
Bambino Nursery & Pry Sch, Ipaja
Little Lights Nursery & Pry Sch, Ipaja
Laspo Nursery & Pry Sch, Ipaja
Total
Missing
Grand Total
Source: Field Survey (2012)
Table 4.2 Do you think your academic qualification reflects on your students' performance?
Observed N
Expected N
Residual
Yes
138
73.0
65.0
No
8
Total
146
73.0
-
-65.0
-
Table 4.3 Test Statistics
Do you think your academic performance reflect on your students’
performance?
Chi-Square
115.753a
Degree of Freedom
1
Asymp. Sig.
*significant at 0.001
.000*
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Table 4.3.1: Test for order of integration of variables Using ADF Test
Variable
@ None
Inference
LGCF
4.3381
I(0)
∆LGCF
- 2.3142
I(1)*
LRGDP
- 0.8810
I(0)
∆LRGDP
- 4.5908
I(1)*
CE
3.5369
I(0)*
∆CE
- 5.9081
I(1)*
RE
1.7112
I(0)
∆RE
- 3.5403
I(1)*
Critical values @ 10% = none: (- 1.61).
Table 4.3.2: OLS RESULTS
Variable
Coefficient
Std Error
T Statistics
Probability
Log (RE)
0.323509
0.151637
2.133448
0.0443
Log (CE)
-0.174999
0.220632
-0.793170
0.4361
Log(GCF)
0.347610
0.264859
1.312434
0.2029
C
8.806664
0.875125
10.06332
0.0000
R-squared
0.674898
F-statistic
11619.93
Adjusted R -squared
0.630566
Prob(F-statistic) 0.000000
Formation, Recurrent expenditure and Real Economic
Also, the R-squared, shows that the explanatory
Growth.
negative
variables explain 67.5% variation in economic growth,
relationship between real economic growth and capital
while the remaining 32.5% is explained by other
expenditure. Using the t-statistics criterion, the result
factors, not captured in the explaining variables in the
presented above shows that only recurrent expenditure
model but the error term. The high F-statistics, tested at
variable is statistically significant, when tested at 5%
5% level of significance however explains the joint
level of significance, while capital expenditure on
significance
education and gross capital formation shows a
expenditure and gross capital formation in explaining
statistically non-significant relationship with economic
variations in economic growth.
The
result
further
shows
a
of
recurrent
expenditure,
capital
growth, which is proxied by real Gross domestic
Product.
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With the model in logarithmic functional form, the
The Nigerian government should get involved actively
result presented in table 3.1 shows that a percent
as regards financing educational pursuits in the country.
increase in Gross Capital formation and Recurrent
The priority being placed on education is low regardless
Expenditure will bring about 0.34% and 0.32% increase
of the United Nations specifying that 26% of the
in the country’s economic growth in the short run,
country’s budgetary allocation should be accorded to
which is in line with economic theories, however,
the education sector. This needs to be addressed as
unexpectedly,
capital
expenditure on education secures the future of the
expenditure on education brings about 0.17% reduction
nation and the world at large. Government needs to
in Real Gross Domestic Product; economic growth in
channel more resources to the capital segment of
the country, also in the short run..
education like building of classrooms and laboratories,
By implication, it was found in the study that Gross
purchase of teaching aids etc. as these will help in
Capital Formation, which is more like investment
enhancing knowledge, increased productivity and by
increases economic growth as well as recurrent
implication promoting economic growth.
expenditure. However, the capital expenditure on
It is a well-known fact that the funding of the
one
percent
increase
in
education, which is expected to stimulate economic
growth is found to be insignificant and also against
economic theory. This however could be explained by
the trend of corruption, gross misappropriation of funds
and also the problem of misuse of public funds, all of
which can actually explain the non-contributory role of
capital expenditure on economic growth in the Nigeria.
educational sector is a burden that is becoming too large
for the government to bear alone. It has also been
realised that the revamping of the educational sector is a
collective effort from both the public and the private
sector. With this realisation, the private sector should be
motivated to do more beyond its regular contributions
of 2% of its profit to the Educational Trust Fund (ETF).
The private sector could contribute more by organising
5. CONCLUSION
AND
POLICY
RECOMMENDATIONS
A country that seeks to experience rapid economic
growth must give high preference to ensuring that a
high percentage of its population is entitled to quality
education. The educational sector is one that ensures an
increase in output per worker and this can transcend
into economic growth.
some in-house seminars or mentorship programmes
where students are linked with professionals that can
enhance their knowledge base. Multinational firms also
can partner with educators and government to finance
some research works of teachers at all levels.
Even though, it is inevitable that people travel outside
the country to study, still the government can take some
pre-emptive measures to reduce the amount of brain
drain in the country. Scholarship and training grants can
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European Journal of Globalization and Development Research, Vol. 5, No. 1, 2012
be awarded to students studying in the country and
Having realized the all-important prominence of the
students studying abroad should be given grants only
teacher-factor
for programmes that are barely taught in our
programme, it is not too much to say that teachers serve
schools/universities due to lack of manpower.
as catalysts for the intellectual, socio-economic,
In addition, a good salary scheme and incentives should
scientific,
be implemented especially for the teaching workforce.
development of any society. Though our analysis have
This will increase their morale of our local teachers for
shown that that the educational qualification of most
efficiency. Also, the scheme will attract those that have
teachers are above the requirements of the National
studied abroad to come back to the country and impart
Policy for Education, still there are some that are still
knowledge acquired to our local students and by
below the requirement, who may be willing to further
implication bettering the quality of our graduates.
their education, but lack the incentives to do so. All of
The importance of education is reminiscent in its role as
a means of understanding, controlling, altering and
redesigning of human environment. It also has a link
with economic development (Education also improves
health,
productivity
and
access
to
good
paid
in
any
technological,
meaningful
cultural,
educational
growth
and
these require funding, commitment, focus and constant
evaluation by the government so that Nigerian children
will be adequately equipped to meet the challenges of
the 21st century and beyond.
Finally, this research work has justified its stated
objectives, it therefore advises upcoming researchers to
employment).
further this research topic by assessing the contributions
Studies have all revealed that increase in national
income and per capita income is a function of education
of private secondary schools and universities to
educational development in Nigeria.
and that differences among nations can better be
explained by differences in the endowment of human,
rather than physical capital. This underscores the reason
why the ‘Asian Tigers’ in the past three decades
allocated between 25-35% of their annual budgets to
their educational sector.
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European Journal of Globalization and Development Research, Vol. 5, No. 1, 2012
[8]. Dike, V. (2000). The Universal Basic
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APPENDICE
OLS REGRESSION
Dependent Variable: LRGDP
Method: Least Squares
Sample: 1985 2010
Included observations: 26
Variable
Coefficient
Std. Error
t-Statistic
Prob.
C
LRE
LCE
LGCF
8.806664
0.323509
-0.174999
0.347610
0.875125
0.151637
0.220632
0.264859
10.06332
2.133448
-0.793170
1.312434
0.0000
0.0443
0.4361
0.2029
R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)
© JournalsBank.com (2012).
0.674898
0.630566
0.941387
19.49662
-33.15028
15.22367
0.000014
Mean dependent var
S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat
13.11374
1.548815
2.857714
3.051267
2.913450
0.639075
ISSN 2220-7414
342