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THE IMPACT OF
EDUCATIONAL EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA
ABSTRACT
There is need for encouraging the
educational sector in Nigeria and its expenditure by the federal government.
The objective of this research is to find out the impact of educational
expenditure to the Nigerian Economy, the null hypothesis (H0) which
states that educational expenditure has no significant effect to Nigeria
economy is tested against the alternative (H1) which states that
educational expenditure has a significant effect to the Nigeria economy. The
linear regression analysis is used adopting the “ordinary least squares”
techniques. Based on the available data, it found out that “Educational
Expenditure” has a positive relationship with “Economic Growth” i.e Gross
Domestic Product. From the finding it recommended that to harness a remarkable
increase in educational sector, federal government have to spend at least 40%
of its revenue in the educational sector in order to develop human capital
resources to obtain a remarkable increase in Gross Domestic Product.
TABLE OF CONTENTS
Title
page
Table of content
Abstract
CHAPTER ONE
1.0 Introduction
1.1 Background of the study
1.2 Statement of the problem
1.3 Objective of the study
1.4 Hypothesis of the study
1.5 Significance of the study
1.6 Scope and Limitations of the
study
CHAPTER TWO
2.0 Literature
Review
2.1 Theoretical
Literature
2.2 Empirical literature
2.2.1
Education laws in Nigeria
2.2.2
Financing of Education
References
CHAPTER THREE
3.0 Research Design and
Methodology
3.2 Model Specification
3.3 Method of Evaluation
3.4 Decision Rule
3.5 Data Required and Sources
3.6 Econometrics Software
References
CHAPTER FOUR
4.0 Presentation and Analysis of
Results
4.1 The Empirical
Results
4.2 Statistical Test of
Significance
4.3 Second Order
Tests
4.4 Evaluation of the Working
Hypothesis
4.5
Examination of the Algebraic Signs of the
Parameter Estimate
CHAPTER FIVE
5.0 Summary, Conclusion and
Recommendations
5.1 Summary of the
Findings
5.2 Conclusions
5.3 Recommendations
Bibliography
Appendix
CHAPTER ONE
INTRODUCTION
1.1 Background
of the Study
It is widely acknowledged that, education is an important
determinant factor of economic growth. Prominent classical and neoclassical
economist such as Adam Smith, Romer, Lucas and Solow emphasized the
contribution of education in developing their economic growth theories and
models. The main theoretical approaches of modeling the linkages between
education and economic performance are the neoclassical growth models of Robert
Solow (1957) and the model of Romer (1990). Apart from the theoretical aspects,
numerous empirical studies have focused on the issue of education and economic
development. According to Ismail (1998), education is considered as a long term
investment that leads to a high production for a country in the future. In
fact, economists argued that advanced education sector will certainly lead
successfulness of a country’s economics and socials development. Therefore,
most of the developed and developing countries emphasize the enhancement of
educational sector. Nigeria has no exceptions in developing and enhancing its
educational system in order to be a world class country (Ibrahmim and Awang,
2008). Nigeria’s commitment in developing its educational sectors has been
tremendous. This can be seen from Nigeria’s annual budget allocation. Nigeria
has allocated significant amount of budget for education sector and it keep
increasing for each budget session. What can be learnt is that, from 1989 there
have been consistent increases for Nigeria’s educational budget allocations.
Despite the financial turmoil that badly affected Nigerian economy in which had
devaluated Nigeria currency, government’s allocation for the educational sector
has never been reduced. In fact it has been increasing. Emphasizing on
educational sector has been successful as it plays important roles in achieving
National development agenda and contributed to a country’s economic growth.
Sheehan (1971) has listed some direct benefit that country’s gain from
education. This includes increases in productivity, labors’ income, country’s
economic growth and literacy rate. In addition, education could also improve
efficiency of income allocation as well as labor’s mobility and transfer in
accordance to work demand of trained workers.
Nigeria is a multi-ethnic group but consisted of three major ethnic groups
namely, Igbos that inhabited there Eastern part of the country,
Hausas which inhabited the Northern part and Yorubas at the Western part.
Before the coming of the colonial masters, Nigeria practiced a traditional
educational system which comprises of teachings based on religious background
(Islam and Christianity). Essentially, the major aim of traditional education
was to foster good character in the individual member of the society for them
to be useful in the larger society. For instances, local stories and folktales
were frequently told and references to ancestors who demonstrated the “act of
legendary”. Notwithstanding that this system was a hallmark for the
preservation of socio-cultural values and norms but the system fail to make
room for critical thinking and research development. Since much valuable time
are wasted as a result of unnecessary long period of training thereby impending
the development of the child’s potentialities.
After the demise of slave trade in 1806 as a result of missionaries
resettlement and rehabilitation plans. These Christian Missions included Church
Missionary Society (CMS), Methodist Missionary Society (MMS), the Roman
Catholic Mission (RCM) and others. They preached the mysteries of reading and
writing with the “Holy Bible” and its content as their principal reference
materials and belief.
In
Nigeria, Western education formally took-off at Abeokuta in today’s Ogun State
by the establishment of a formal school in 1546 by the Church Missionary
Society and ten years later, the Baptist Mission led by Reo Bowen arrived to
established their own school, the Roman Catholics and others followed suit in
establishment of schools in several parts of Nigeria.
Up
until 1884, when Nigeria was formally made a colony of the British government,
little attention was paid to the educational needs of the people as the entire
Western education system was solely missionary affair. One of the immediate
benefits of the early western education was that the graduates from the
Christian schools secure white-collar jobs in the colonial establishments.
The national consciousness of the significance of education in Nigeria formed
the basis upon which education expenditure became a matter of serious
consideration. Since 1960 to date one of the major problems facing educational
sector is low investment in the infrastructural, research grants and learning
aid especially in the public schools. For several years now, educational
industry has suffered tremendous neglects arising mainly from the ineptitude of
education administrators at the various levels of government in Nigeria.
According to Prof. Ukeje B.O “the problem of education is not only in terms of
the economic factor of increasing demands in the face of decreasing resources
but also in terms of political considerations.
On
the foregoing promises, this paper work stands to present a framework in which
policy interventions can be hinged in order to ameliorate the problem of poor
financing and inconsistencies in the federal government’s educational
expenditure pattern in Nigeria.
1.2 Statement
of the Problem
The
federal government allocation to education sector has declined steadily since
1999 and is much lower than the average in the last years of military rule.
Alternative source of financing education explored by the federal government is
the Education Tax Fund (ETF) established in 1995. ETF ensures that companies
with more than 100 employees contribute 2% of their pre-tax earnings to the
fund. Primary education receives 40% of this fund, secondary education receives
10% and higher education 50%. Primary education has also in the past decades
receives from the Petroleum Trust Fund (PTF) for capital expenditure and
provision of infrastructural materials.
Despite all alternatives, the infrastructure and facilities remains inadequate
for coping with a system that is growing at a very rapid pace. Due to poor
financing, the quality of education offered is affected by poor attendance and
inadequate preparation by teachers at all levels. Physical facilities such as
libraries, laboratories, modern communication and information technology
equipment have to be provided.
1.3 Objectives
of the Study
The objectives of this work are:
Firstly, to find out the relationship between federal government educational
expenditure and economic growth in Nigeria for the period of 1994-2011.
Secondly, to find the impact of federal government educational expenditure on
economic growth in Nigeria.
1.4 Hypothesis of the Study
For the purpose of this study, the following hypothesis will be tested.
H0: Federal government
expenditure has no significant impact on economic
growth in Nigeria.
H1: Federal government
expenditure has significant impact on economic growth in Nigeria.
1.5
Significance of the Study
The federal government annual expenditure to the educational sector is of great
concern to all citizenry. This is because; educational expenditure has a
significant impact on human capital development.
The study will be of great importance to policy-makers because it will make
them to see the impact of education on national development and will make them
to make policy adjustments concerning the education sector.
The study will also benefit the education authorities and administrators,
as this will propel reforms and transformation where necessary.
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