Human Development and Economic Growth: An Empirical Analysis from the Nigerian Economy (1970-2011)

ABSTRACT: This study investigates the long run relationship between human development and economic growth in Nigeria between 1970 and 2011 through the application of Johansen Cointegration technique and Vector Error Correction Methodology. The origin of the human development index can be traced back to the work of an Indian economist Amartya Sen (1990) and a Pakistani economist Mahbub ul Haq (1995). They identified three major components for measuring human development level namely education, health and income. Our cointegration analysis suggests a long run relationship between these variables and economic growth. The findings also show that the greatest proportion of the variations in the real GDP can be attributed to the shocks in educational component among other identified human development components in the study. Though there are mixed evidences on the impact of income inequality on economic growth, our findings suggest that increasing income inequality and high mortality rate have a significant negative effect on the real GDP in the case of Nigerian economy. Keywords: human development, economic growth, cointegration, principal component analysis (PCA). …………………………………………………………………………………………………………………………