Higher Education and Economic Growth of Nigeria: Evidence from Co-integration and Granger Causality Examination

Abstract

This study investigates the level of co-integration between education and economic growth in Nigeria and the causality effect of education on economic growth. The study employs secondary form of data spanning from 2000 to 2018 and are sourced from UNESCO, World Bank and CBN statistical bulletin. The data are collected on GDP, education expenditure and gross enrolment ratio of higher education for the period under review. The study uses Johansen co-integration and Granger causality tests for analysis and the findings show that education and economic growth in Nigeria have a long term co-integration while Granger causality test reveals that education and gross enrolment ratio of higher education are not affecting economic progress and the GDP is not influencing both of them too. The implication is that if Nigeria’s educational system continues the way it is presently, it will remain a long term problem and will continue to negatively affect economic growth. Other countries will be benefiting from modern technologies through improvement on their educational system, but Nigeria may not be at the same pace if immediate policy changes in favor of education are not embraced. Thus, the study suggests major improvement on government’s annual budgets for education in order to decrease the population of out-of-school children and increase the stock of skilled human capital in the country.