PUBLIC SECTOR INVESTMENTS IN THE EDUCATIONAL SECTOR: IMPACT ON THE GROWTH OF THE NIGERIAN ECONOMY

ABSTRACT

The study basically aims at examining the impact of public sector investment in the educational sector on the growth of the Nigerian economy. In addition to being a fundamental end in itself, education is also viewed as an important means or instrument for increasing a nation’s economic and social welfare. However, insufficient and uncertain budgetary allocations to education seem to have resulted in the deterioration of its impact on economic growth. The study sets out to empirically investigate the relationship between public educational investments and economic growth in Nigeria, using annual time series data from 1977 to 2004. A regression analysis of the relationship between  economic growth and public educational expenditure in Nigeria between 1977 and 2004 using Ordinary Least Squares (OLS) technique reveals that the public investment expenditure on education demonstrates a positive effect on economic growth in Nigeria but its impact appears to be insignificant. In Nigeria today, the present situation calls for a very serious reflection on her errors of judgment or neglect, and a determination to take the necessary and bold remedial steps clearly focused on adequate investment on education. The study recommends that there is the need to devote higher and fixed percentages of annual budgetary allocations to education, with adequate monitoring of the allocations, disbursements and timely utilization of funds in the education subsector, and the sourcing of internal and external education funds alongside private sector participation.

FOR THE FULL PROJECT CHAPTERS 1-5, YOU CAN MAKE A SUM OF #3,000 TO; 

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CHAPTER ONE

INTRODUCTION

  • BACKGROUND OF THE STUDY

The educational sector of any economy is very vital in the bid for economic growth and development of any nation. Education has become more significant in growth with the emergence of the service/high-tech economy. It plays a crucial role in the development of human resources in terms of nurturing and enhancing the skills and capabilities of individuals.

 

The importance of education to human beings cannot be over emphasized. Education has been defined as all efforts, conscious and direct, incidental and indirect, made by a given society to accomplish certain objectives that are considered desirable in terms of the individual’s own needs as well as the needs of the society where that education is based. (Fafunwa, 2003)

Education is critical to the development of human capital, attainment of higher living standards, social integration and increased labour productivity through the adoption or adaptation of modern technology. Economic development theorists generally agree that the quality of human resources has a significant impact on economic development and growth. They are of the notion that the quality and quantity of labour determine production by virtue of it being a factor of production. As once remarked by Ola (1998), “If you see any economy that is not doing well, find out what is spent on education”. Psacharopoulos (1973), Coombs (1985) and Aboribo (1999) have all revealed in one way or the other that increase in national income and per-capita income is a function of education and that differences among nations can better be explained by differences in the endowments of human, rather than physical capital.

In most developing countries, educational investment is solely the responsibility of the public sector, and as such the government therefore provides the fund for the sector, although in recent times, private investments are being made to support public investments. However, the amount of fund government is able to disburse depends on the proclaimed interest for education, available fiscal resources, investment demands of other sectors in addition to the state of the economy. Hence, the allocation of funds to educational investment in many developing countries like Nigeria depends on the income of the nation. With the sharp increase in population, huge resources have been committed by the three (3) tiers of government (federal, state and local) towards raising the level of literacy with each depending to a high degree on the federal collected revenue and its distribution among them.

Education in Nigeria, to an extent, is a constitutional matter, which makes it the responsibility of the government though it is financed by the public sector in conjunction with the private sector and external bodies. It follows that the sources of education investment funds are majorly public in nature. One of the approaches adopted by the government in financing education is the annual budgetary allocation to the sector that are distributed as subventions or grants to the different levels of education. These grants or subventions to educational institutions are made through the respective Education Ministry at each levels of government by the coordinating agency of education such as the National Universities Commission (NUC).

With regards to the growing problem of poor academic standards, of very serious concern is the conclusion that cognitive achievement is low in African students by world standards and that the recent further decline in supplies of the key inputs at all levels, such as books and other learning materials has had deleterious (harmful) consequences in terms of quality of performance of students as identified in cross-national studies. There is every reason to believe that there is potential for substantial improvement of the internal efficiency of these systems with a reasonable increase in investment (Kwapong, 1995).

  • STATEMENT OF THE PROBLEM

According to Hartshorne (1985), “…there is a problematic relationship between education and economics which the conflicting theories of the economists have done little to illuminate”. However, there is sufficient evidence to suggest that formal education makes a positive contribution towards economic growth. The term ‘national wealth’ has been amplified to accommodate human capital, as well as physical capital, as an independent factor of production necessary for high and sustainable economic growth rates.

 

However, in Africa, the rates of return on investments in education are estimated to be 26 per cent for primary education, 17 per cent for secondary education, and 13 per cent for higher education. These rates of return include public subsidies in total costs but do not attempt to include positive externalities in the benefits. Thus, they understate the true social rates of return.

 

With the introduction of Structural Adjustment Programme (SAP) in Nigeria in 1986, there was a substantial fall in investment on education in real terms. Although, the adjustment was supposed to address distortions in the economy and enhance the system of economic management but there has been a rather increasing but less than significant revolution in alleviating the problem of education financing in the country since then. Nigeria in her bid to meet up with the ‘International Goals of Education for All’, adopted at the “World Declaration on Education for All” at the Jomtien (Thailand) World Conference in 1990, has not yielded substantial fruits. The country is ranked first among the 21 countries at serious risk of not achieving education for all with primary education net enrolment ratio of less than 80 percent. The country is also known to be at risk with low adult literacy rate of less then 70 percent.

Nigeria was listed among low human development countries in the Human Development Report (HDR) of 2002, with an index of 0.462, and the public expenditure on education as percentages of Gross National Product (GNP) for the periods of 1985-1987 and 1995-1997 were 1.7 and 0.7 percent respectively. These figures for Nigeria in the two periods were the least among the 13 African countries under the Low Human Development with respect to expenditure on education. With this structure of investment in education, it will be an up-hill task for Nigeria to achieve sustainable growth and development (Awopegba, 2002).

Nigeria’s education system has suffered from policy neglect in the past two decades or more. Total expenditure on education in 2004 was less than 1 percent of Gross National Income (GNI) – far below the continental average of 4.71 per cent. Under-funding of the education system has left the school systems, including the formerly excellent universities, in deep crisis in terms of standards and facilities, both declining (Yaqub, 2005). Inadequate funding has resulted in problems such as the breakdown and deterioration of facilities, shortages of new books and current journals in the libraries, supplies for the laboratories, and limited funding for research.

The root cause of the problems of education sector in Nigeria can be traced to poor financial investment. This was confirmed in the work of Central Bank of Nigeria (2000), which posited that inadequate funding has been the bane of educational system to the extent that budgeting allocations had been very low compared with others.

In the NEEDS (National Economic Empowerment Development Scheme) Programme, the Nigerian government became familiar with the fact that one of the main challenges facing the educational institutions in the country was inadequate funding, and as such the issue of investment in the educational sector is quite obvious.

The government has, however, started to address some of these problems. Increased spending on education and Universal Basic Education (UBE), aimed at providing free education for all pupils at the primary and junior secondary school levels, has enabled the rehabilitation of schools and contributed to improvements in school enrolment rates. The total gross primary-school enrolment rate increased from 98 per cent in 2000 to 120 per cent in 2005, while the total secondary-school enrolment rate rose marginally from 34 per cent to 36 per cent during the same period.

In spite of certain necessary conditions being met in financing the educational sector, there’s still the need for greater and insightful attentions to be focused on the need to maintain and expand educational infrastructure to accommodate the pressing need of a fast growing population.

  • SCOPE OF THE STUDY

The study is purely constrained to the Nigerian economy with some little references to other countries (or continents), as the need arises.

Apparently, the study basically entails public investment in the educational sector and its relative and immediate effect in terms of economic growth and the scope of the study is restricted to the period between 1977 and 2004.

The research study will focus on the various activities and policies engaged by the government in financing the educational sector, mainly formal education, in a bid to improve economic growth. The study will also address issues of sustainability in public investment on education in the Nigerian economy.

  • SIGNIFICANCE OF THE STUDY

 

In this study, public sector investment in education should be understood in a much broader sense to the extent that we shall underscore also, even if briefly, that the private sector is also contributing its quota to educational developments in terms of investments.

 

At the end of the study, we should have confidently confirmed how effective government expenditure on the educational sector has been to economic growth and if public sector investment has proved to be effective or not, we should then see what necessary steps can be taken to improve the educational sector of the country.

This study is considered noteworthy and relevant for a number of reasons. This study is therefore of great importance for two (2) main reasons:

  • To update our knowledge as regards the impact of public educational investment on the growth of the Nigerian economy
  • To provide necessary insights into the impact of institutional reforms on the effectiveness of public sector investment in the educational sector in Nigeria.

 

  • OBJECTIVES OF THE STUDY

The study is basically aimed at acquainting readers with the fact that if the situation in the country is subjected to an empirical analysis and substantiated with the facts of history, one will observe that public sector investment on education has made certain impacts but then there are certain factors that have brought about the less effectiveness of the various activities and policies introduced.

Primarily, the objective of the study is to appraise the impact of public sector investments in the educational sector on the growth of the economy. To this end, the secondary objectives of the study are as follows. To:

  • Establish a link between public sector investment in education and economic growth in Nigeria
  • Analyze the trend in public sector investment in education towards economic growth in Nigeria
  • Ascertain the contributions of public sector investment in education to overall economic growth in Nigeria
  • Investigate whether reforms in the educational sector in terms of public sector investment have improved the economic well-being of the nation.

 

  • RESEARCH QUESTIONS

In the light of the above, this study is set to provide solutions to the following problems;

  • What is the relationship between public sector investments in education and economic growth in Nigeria?
  • What impact has public sector investments in education had on the growth of the Nigerian economy?
  • Have educational reforms in Nigeria in terms of government investments improved the growth rate of the Nigerian economy?

 

 

 

  • HypothesEs of the study

In an effort to realize the objective of this study, we will subject the following hypotheses to test:

H0: Public sector investment in education has not significantly improved the growth of the Nigerian economy.

H1: Public sector investment in education has significantly improved the growth of the Nigerian economy.

 

H0: There is no statistically significant relationship between public investment on education and economic growth in the country.

H1: There is a statistically significant relationship between public investment on education and economic growth in the country.

 

  • METHODOLOGY OF THE STUDY

The study will involve empirical data analysis. The theoretical approach to be used for the study will be analytical and interpretative in nature. This will enable us to trace the relative impact of public investment on education, based on the trend and effect of past activities and policy implementations to the current growth level and give a substantial interpretation of issues raised.

Econometric approach will be applied with the Ordinary Least Squares (OLS) method, which is one of the econometric methods of estimation, being utilized in conveniently estimating the specified parameters of the model. The OLS method is being adopted for the following reasons:

  • The parameter estimates obtained by the OLS method are optimal in nature.
  • The computational procedure is fairly simple as compared with other economic techniques.
  • The least square method has been used in a wide range of econometric relationship with fairly satisfactory result.
  • The Ordinary Least Square technique is simple to understand.

Other parametric tests (such as T-test, F-Test, Durbin-Watson, and others) would also be engaged as research instruments in providing detailed explanations to the results obtained with respect to the hypotheses afore stated.

  •  DATA SOURCES

In the study, we shall depend largely, if not solely, on secondary data sources. The secondary data sources will basically be based on journals, articles, textbooks and other relevant materials on the subject topic – Public Investment on education.

The data on the variables would be obtained from various publications of the Central Bank of Nigeria (CBN) Annual Report and Statement of Account, Federal Office of Statistics (FOS), Annual Abstract of Statistics, CBN Statistical Bulletin, National Economic Society (NES) publications.

  • OUTLINE OF CHAPTERS

For an easy analysis and assessment of this project, the study will comprise five (5) major chapters, each dealing with the different aspects of the study.

Chapter one deals with the general introduction of the study with focus on the background to the study, statement of the problem, scope of the study, significance of the study, objectives of the study, research questions, hypothesis of the study, methodology of the study, sources of data, as well as a brief synopsis of each chapter.

 Chapter two will focus on review of relevant literatures with respect to the subject topic. Relevant empirical studies on public investment in the educational sector will be reviewed.

Chapter three focuses on theoretical framework, nature of research method, model specification, and introduction of variables to be used in the estimation technique as well as the research instruments employed.

Chapter four constitutes the empirical analysis – data presentation and statistical analysis using Ordinary Least Squares (OLS) regression method, and presentation of results, as well as interpretation of results obtained via prescribed research instruments.

Lastly, Chapter five will present the summary, conclusion and policy recommendations to be adopted, and suggestions for further study. The limitations to the study will also be cited.

FOR THE FULL PROJECT CHAPTERS 1-5, YOU CAN MAKE A SUM OF #3,000 TO; 

ECOBANK NIGERIA, A/C NO. 3563059813, ACCOUNT NAME: EUREKA MAGAZINE.

AFTER PAYMENT, YOU CAN CALL OR SEND A TEXT OF THE PROJECT YOU WANT WITH YOUR EMAIL AND THE PROJECT WILL BE DELIVERED TO YOU WITHIN 30 MINUTES AFTER PAYMENT IS CONFIRMED. 

REACH US ON (+234)-8065228170 OR WRITERSNG@HOTMAIL.COM

NOTE: PROJECTS ARE MEANT TO GUIDE YOU DEVELOP YOURS AND FOR REFERENCE PURPOSES AND SHOULD NOT BE PLAGIARIZED. 

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