Impact of government educational expenditure on economic growth 1986 – 2014.

The relationship between government expenditure in the educational sector and economic growth has continued to generate series of debate among scholars. With its large reserves of human and natural resources, Nigeria has the potential to build a  prosperous economy, reduce poverty significantly, and provides the health, education and infrastructural services that its population needs. Nevertheless, despite the country's relative oilwealth, poverty is widespread, and Nigeria's basic social indicators place it among the twenty poorest countries in the world (World Bank, 2004). In addition, many Nigerians have continued to wallow in abject poverty, while more than 50 percent live on less than US$1 per day. Dilapidated infrastructure (especially roads and power supply) in Nigeria is everywhere a visible sign which has led to the collapse of many industries, and has resulted in high level of unemployment. Moreover, macroeconomic indicators like balance of payments, importobligations, inflation rate, exchange rate, and national savings reveal that Nigeria has not fared well in the last couple of years (CBN, 2009).
Although, incidence of poverty in Nigeria is much higher in the rural areas than in the urban centers, the urban slum-dwellers form one of the more deprived groups in Nigeria. The poor are those who are unable to obtain an adequate income, find a stable job, own property or maintain healthy living conditions. They also lack an adequate level of education and cannot satisfy their basic health needs.
As such the poor are often illiterate, in poor health and have a short life span (Amaghionyeodiwe and Osinubi, 2004). A good way of generating economic growth is through educational development. The basic importance of education is to enable individuals with knowledge and the ability to apply that knowledge. Education is therefore commonly regarded as the most direct avenue to rescue a substantial number of people out of poverty since there is likely to be more employment opportunities and higher wages for skilled workers. However, public spending on education has been low, being only 0.9 percent of the GNP in 2002 (World Bank, 2004).
Most of the evidences in the human capital growth regression analysis are cross-country regression analysis of developing nations and OECD countries many of which are yet to be done for individual countries. Again, while the literature is dominated by studies investigating the relationship between government expenditure and economic growth.
In many African countries, formal education is in a state of crisis. While curriculum reforms continues to serve as an ongoing source of public policy debate, African leaders are confronting  increasing difficulty in allocating educational resources to meet present and future levels of educational demand. The paralysis that has been unfolding is one characterized basically by education’s rising claim on public sector resources against a backdrop of widespread poor economic growth, mounting international dept and rapidly growing population, whose demand for education cannot be met readily by traditional means. There   has  been a positive relationship between per capita GDP and  educations share of GDP. Wide disparities suggest that since education must compete with other claims for investment resources,  how efficiently education is delivered may be as important as the level of resources. Within this contest, we ask what options are available to respond to Africa’s growing educational demand, how can they be managed and what role can these options play in promoting accelerated economic growth and development?
Education is both a private and social investment that is shared by individual students, their families, employers, governments and other groups including international agencies. The sharing arrangement varies considerably from country to country,  both in the proportion of public and private funds allocated to education and in their mechanism by which the cost of education is founded. It thus yields direct and indirect benefits both to individuals and to the society. The most obvious benefits of education to individuals  is higher lifetime earnings, and to the society, higher productivity of educated workers and the additional contribution to national income over their entire working lives (Psacharopopulos, 1994).
A major controversy among analysts and policy makers   concerns the objective of educational development. Some have suggested that education should be provided for its own sake as a means of enriching individual’s knowledge and   developing their full personality.  This concept of education has continually   influenced policies in advanced countries of the world.  Others hold that education should seek to prepare people to perform functions that are essential for the transformation of their environment. This  two  point of view can be considered in terms of educational capital good in rooted in the concept of  human capital. This attaches high premium to human skills as a factor of production in the development process. A corollary of this is that human skill or productivity is just as important input in the process of development of finance, natural wealth and physical plant. Because education plays a most important role in the creation and improvement of human capital, its relevanceand  important to economic growth and development are now well recognized in development planning. Experiences of developing countries during the past decade has indicated that shortage of talents and skills needed for development can decisively retard economic progress.
 It is widely acknowledged that education is an important determinant factor of economic growth. Prominent classical and neo-classicaleconomists such as Adam smith, Romer, Lucas and Solow emphasized the contribution of education in developing their economic growth theories and models. The main theoretical appproaches of modelling the linkages between education and economic performance are the neo-classical growth models of Robert Solow (1951) and the models of Romer (1990). Apart from the theoretical aspects, numerous empirical studies have focused on the issue of  a education and economic development. According to Ismail (1998), education is considerd as a long time investment that leads to a high production for a country in  the future. Infact, economists argue that advance educational sector will certainly lead to successfulness of a country’s economic and social ddevelopment. Therefore, most of the developed and developing countries emphasize the enhancement of the educatrional sector.
Nigeria has no exceptions in enhancing its educational system in order to be a world class country (Awang and Ibrahim, 2008). Nigeria’s commitment in developing it’s education sector has been tremendous. This can be seen from nigeria’s annual budget allocation. Nigeria has allocated significant amount of budget for educational sector and keep it increasing for each budget seesion.  Despite the financial turmoil that badly affected nigeria’s economy in which had devaluated Nigeria currency, government’s allocation for the educational sector has never been reduced. Emphasy on the educational sec tor has been successful, most especially in the late 1980s and early 1990s, as it plays important role in achieving national development agenda and contributed to the country’s economic growth and literacy rate. Sheehan (1971) listed  some direct benefit that countries gain from education. This include increase in productivity, labour’s income, countries economic growth and literacy rate. In addition, education could also improve efficiency of income allocation as well as labour’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, the Igbos the inhabited the Eastern part of the country, the Hausas which inhabited the Northern part and the Yorubas at the Western part.
Before the coming of the colonial masters, Nigeria practised a traditional education system which comprises of teachings based on religious background (islam and christianity). Essentially, the major aim of educatioon was to foster good character in the individual member of the society for them to be useful in  the larger society. For instance, local stories and folktales were usually told and references to anscestors who demonstrated the act of legendary. Notwithstanding that this system was a hallmark for the preservation of socio-cultural values and norms, the system fail to  make room for critical thinking and research development.
The rapid expansion of education system over the last three decades, compounded by more recent global economic crisis      and fiscal   stringency due to over dependence     on oil  has  left both lever and higher institutions in Nigeria short of funds for their    operation in relation to the operations imposed on them.
          The idea that education is a form of investment  in human capital is one of the most important development in economics in recent decades and it has had considerable impact on educational planning both in developed and developing countries. For both government and individuals, the choice between different ways of investing resources rests to a large extent on an evaluation of the cost and benefit associated with the investments.
          In Nigeria, the decline in the quality of education at all levels has become a fact of national life. Indeed, the most significant event in the sector in the recent past has been the continuing crisis besetting the educational system. This crisis is rooted in the deteriorating conditions within the citadels of learning, in respect of teaching facilities and other infrastructureal facilities, the welfare of all those involved in the teaching profession and the ever increasing cost of education. This has culminated in students unrest and industrial actions by lecturers and teachers through their respective embrella association such as Academic Staff Union of Nigeria Universities (ASUU), Nigeria Union of Teachers (NUT), College of Education Academic Staff Union (COEASU) etc. at the different levels of educational system.
          Owing to the failure of the state and local government to fund primary and secondary education appropriately, the federal government moved to take over the affairs of their tiers of the system at the expence of the higher education. Due to this shift in the government policy, the crisis in the Nigerian educational system, and their fundamental causes i.e. the gross under funding of the institutions, poor conditions of services for teachers among other issues have continued unabated. The study seeks to evaluate the efficiency of government educational expenditure as it impacts on the economic growth and development, human capital development and the literacy rate in Nigeria ranging from 1986 to 2012.
          The main objective of the research work is to determine e impact of the governments’ educational expenditure on Nigerian economic growth between 1986 – 2014.

CHAPTER 1 - 5 including regression analysis and registration data 

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