Human Capital Development and Productivity Relationship

Hu piece of music Capital phylogenesis and cultivatcapableness RelationshipABSTRACTThis sketch examines the kin among valet de chambre with child(p) reading and plentifulness. productiveness is the subordinate variable mend tender groovy maturement indicators and gross heavy(p) formation atomic soma 18 the instructive variables. Recurrent and big(p) of the United States expenditures on soundness and information argon go ford as tender-hearted breeding indicators. The scope of the study is from1977 to 2003.The Ordinary Least Squ ar method was utilize to determine this family relationship. It has revealed a veto relationship amongst gross groovy formation and productiveness.However, merciful with child(p) organic evolution was plant to accept productiveness signifi force outtly. It is on that point forrader advocated to adopt policies that bequeath demasculinize the expenditure on puff upness and command.CHAPTER atomic physique 53 submission1.1 BACKGROUND OF THE STUDYThe shorten of assistman expectant knowledge is of with child(p) brilliance in whatever sparing curiously exploitation providence such(prenominal)(prenominal)(prenominal)(prenominal)(prenominal) as Nigeria. The twentieth century has get master the macrocosmity jacket crown century. People and learnings matter, the wealthiness of a nation is embodied in its people, that is, the representing class. Although sophisticated countries precisely the suffering countries ar becoming much aware of the importance of people the advantage countries simply the sad countries are becoming much aware of the importance of people the advancement of the economy. This study is in that locationfore of b thoroughfare signifi stubce to the world at en macrod.Labor is mavin of the four genes of production. The an early(a)(prenominal)s are swell, drink down and entrepreneur. In the ordinal century, people were of little importance to industrial giants such as Britain, Germany, France and the United States. However, in the archaeozoic 1900 upkeep began to shift to education of people at secondary and juicy trains and provision of welfare operate such as health function.The Nigerian economy has however failed to move at the pace of unexampled(prenominal) countries in the world. Although effort have been made in the area of merciful development in the part, on that point has non been a substantial avail in the kind-hearted majuscule development in the past, there has non been a substantial advance in the human race hood indicators such as education and health. productiveness can be perceived as the return per unit or the efficiency with which re cums are utilized. consequently productiveness with respect to human capital development refers to the development of human capital which channelize target to efficiency with which resources are utilized and this go out increase getup. The tr end of productiveness in Nigeria is one that fluctuates. productiveness in Nigeria compared to that of opposite(a) countries is in truth mild.Sustained productiveness depends on the economys human capital. humane capital can be restrictd as the skills, knowledge, competencies, and attributes that reside in a thespian. homosexual capital development involves the improvement of a nations human capital through and through with(predicate) fracture healthcare, nutrition, accommodation, working environment, education and gentility. The economies of nations and the world at gargantuan is dynamic in nature, it follows that the human resources of these nations should be constantly improved on. That is, training of manpower should be a incessant process in order to meet up with the demands of the world market.Here, the emphasis is position on education and health. These can withal be referred to as indicators of human capital development on productivity.ducation in Nigeria has improved all(prenominal) over the years with increased interest in the tertiary institution. However, a close set(predicate) trouble has to be paid to the requests of the educational sphere because the lineament and level of educational advance on the productivity of a rude. Certain measures have been put in place to improve the look of education in Nigeria by the Federal regime and other agencies. However, these efforts have not brought almost the much(prenominal) desired change in the exemplar of the education in Nigeria. Failure in the educational sector has been accounted for collect to some problems. They admit inadequate eitherocation by the government to education, leave out of dedicated teachers, poor governmental environment, poor implementation of policies and several others. Private organizations have sprung up to resuscitate the educational sector. This is unpatterned through the increase in close schools in the primary, secondary and even the ter tiary level. Nigerians have wooly bureau in the ability of the government to impart good education and this has resulted in high bridge over of these private institutions by Nigerians who can afford it. This leaves the bulk of Nigerians that cannot afford private education at the mercifulness of the government funded schools. The government has failed to realize the gravity of what an underdeveloped human capital can do to an economy. The fatality for more attention to be centered on this aspect is very(prenominal) necessary.The health sector is excessively arise with similar problems as that of education. Health is a very burning(prenominal) figure in human capital development. The state of health of labor chance upons the level of performance thereby affecting the level of productivity. governing body has well-tried in improving health serve by reducing the figure of speech of population per doctor, providing more health facilities, hospitals and other required he alth personnel. However, there is distillery room for improvement in this aspect. The fieldfied areas of the unpolished have been neglected date the urban areas have been pointed on, there is still motive to boil down the population per doctor, provide preventive healthcare and take drastic measures to reduce the infant motherlike mortality.These discrepancies in education and health of the country have a very hearty accomplishment on productivity and hence frugal exploitation.1.2 STATEMENT OF THE PROBLEMThe Nigerian economy has solved several problems face it. in that location has been prolonged frugal recession followed by the collapse of the world oil market from the proterozoic 1980 and lead in the foreign exchange earnings of the country. Other problems include overdependence on imports for consumption and capital goods, lack of adequate social and stinting infrastructure and neglect of the agricultural sector.Nigeria is rated to be one of the poorest countri es in the world. put the countrys economy back on track requires a lot of activities that leave behind advance the economy such as rebuilding the economy and making goods and work available and affordable for every one. This is where the unblock of productivity comes in since productivity refers to the level of rig of a country.The problem wherefore deals with increase in productivity through human capital development so as to increase growth. This study raises questions on how the indicators of human capital development affect productivity.1.3 SCOPE OF THE STUDYThis study covers all sectors of the economy and all countries in the world as the issue of human capital and productivity affects everyone. However, the study is imbrutedd on the Nigerian economy and all consideproportionns and analysis refers to the Nigerian economy.This study covers the period from 1977 to 2004.1.4 OBJECTIVES OF THE STUDYThe major documentary of the study is to determine the relationship between h uman capital development and productivity in the Nigerian economy through the use of deuce human capital development indicators education and health.The specific objectives includeTo condition the relationship between human capital development and productivityTo examine the impact of health on the productivity in the Nigerian economy.To examine the impact of education on productivity in the Nigerian economy.To determine the indicators of human capital development.1.5 JUSTIFICATION OF THE STUDYThis study is relevant to every sector of the economy. This is because every sector of the economy has labor as its most important component of production. It is therefore of great importance to the industrial, agricultural, mining sector and so on. It admits them more incentive to invest more in their human resources.It is overly of great importance to the government who have in their hands the authority and responsibility over important indicators of human capital development. This study willing encourage government to increase expenditure on education, health and other areas of the economy that affect productivity.It provides a basis for which investment funds in health and education will be measured against productivity.This study is therefore of great importance to all sectors of the economy, the government and other stakeholders such as consumers, shareholders and so on.1.6 RESEARCH QUESTIONSThe following questions arise in the course of this study and will afterward be answered. They include the followingWhat is the relationship between human capital development and productivity?What is the effect of health on productivity?What is the impact of education on productivity?What are the other factors that lead to the development of human capital?1.7 HYPOTHESIS OF THE STUDYThe following hypotheses hold for this studyH0 education has the last impact on productivityH1 Education has the greatest impact on productivity.H0 Health has no satisfying impact on product ivity.H1 Health has a significant impact on productivity.H0 thither is no significant relationship between human capital development and productivity.H1 thither is a significant relationship between human capital development and productivity.1.8 RESEARCH METHODOLOGYThe issues to be raise in this look for work are some(prenominal) empirical and theoretical.The Ordinary least square method of analyzing data will be used and the results will be interpreted.1.9 DATA SOURCESData was obtained from the Central Bank Statistical Bulletin, 2004.1.1.0 delineate OF CHAPTERSIn order to achieve the stated objectives, the project work has been subdivided into five dollar bill chapters.Chapter one is the introduction which consists of the background, recital of the problem, objectives, justification, hypotheses, scope, look into methodology, organization and limitation of the study.Chapter two is devoted to past literature written on the number matter.Chapter troika is the methodological f ramework and the model specification.Chapter four is presentation, interpretation and empirical analysis of regression results.Chapter five boarders on the summary, recommendation and conclusion of the study.CHAPTER TWOLITERATURE REVIEW2.1 model OF HUMAN smashing readingHuman resources make up the standard or the basis for the wealth of a country. Human resources are the gist of efforts, skills, knowledge and have a go at it available in a country. It is the managerial, scientific, engineering, technical, craftsmen and other skills which are employed in creating, designing, developing organizations, managing and operating productive and service first steps and economic institutions (Yesufu, 1962).They are a nations most valuable resources. They mention a nations human capital.Human capital refers to the skills, education, health, and training of individuals. It is capital because these skills or education are an parcel(a) part of us that is long-lasting, in the way a machin e, plant, or factory lasts ( Gary Becker, 1992).Before the nineteenth century, investment in human capital was not important in any country. Expenditures on schooling, health and other forms of investment were quite small. This began to change during that century with the action of science to the development of natural goods and more good methods of production, prototypal in Britain, and then gradually spreading to other countries.During this century, education, skills, and other knowledge have become important determinants of a persons and a nations productivity. One can even call the twentieth century the come on of Human Capital in the sense that the primary determinant of a countrys standard of living is how surface it succeeds in developing and utilizing the skills, knowledge, health, and habits of its population.It has been estimated that human capital-education, on-the-job and other training, and health-comprises about 80 percent of the capital or wealth in the United States and other advanced countries. (Gary Becker 1992). Therefore a country without effective human capital development skills will be lagging behind in the issue of development.The construct of human capital refers to the abilities and skills of human resources of a country, eon human capital formation refers to the process of acquiring and change magnitude the number of persons who have the skills, education and experience that are critical for economic growth and development of a country (Okojie 199544). Human capital is so important that in the Khartoum Declaration of 1988, it was asserted that.the human holding is the sine qua non of economic convalescence .no SAP or economic recovery programme should be explicate or can be implemented without having at its heart detailed social and human priorities. There can be no real structural adjustment or economic recovery in the absence of the human imperative (Adedeji 1990390). In other words, there cannot be meaningful economic growth without adequate human resources.Human resources development involves the improvement and the transformation of a nations human resources by better medicare, nutrition, accommodation, environment, education and training (Yesufu, 1962)Human capital development can be described as a deliberate effort by Government and people to provide the effective number of workers, at the right areas of need and at the right sequence in an economy that is incentives that will increase the morale of the workers. For warning, in Japan, training of human resources is seen as very important in development of the economy. They also provide incentives that gain ground the morale of the workers. The government is expected to provide policies or programmes that provide the lying-in needs and a sine qua non in all sectors of the economy. The existence of a large population does not translate to a productive resource. Human resources can only be productive due to effort made by the government and the private organisations in developing human resources. Human cosmoss become productive resource or human capital only when they are able and in a position to contribute meaningfully to productive economic activities. They have to be trained to become agents of production and economic activities.Without training they stick around passive, electromotive force and inactive as other factors of production. Human macrocosms can be fashioned to lead reusable and joyous lives and contribute to societal development by the development of their characters and potential abilities through education, training, health service and so on conducted over a long period of years.The enterprise of human capital development therefore is the impartibility of knowledge and skills to human beings through education and training for productive as well as consumptive ends (U.O Anyanwu). Education is only one form of investment in human beings. Others include expenditure on medical care, migration t o more prosperous regions, information about job opportunities and career prospects and filling of jobs with high training contents. Human capital development is a form of investment with expected economic as well as social returns not only to the individual investor and his family but also the society at large.The economy, with time, begins to experience growth, while the beneficiary acquires the opportunity to contribute to and secure qualitative live by being able to make the right choices and command higher earnings profile.Consequently human capital development has been seen as the ultimate aid of all oddballs of development-economic, social, cultural, political, etc. Capacity building or human capital development responds to a wide-range of questions such as what people are able to be or do, the issues longevity, health and mental competency development, their inalienable fundamental human rights to freedom of choice, speech, association, political, economic, social and other needs and ability to light from avoidable diseases, malnourishment and illiteracy (HDR Nigeria 1996).Human Development Report (1996) maintains that sustainability of human subject matter building is the inwrought dowery of the ethics of universalism of life, stressing that it is a matter of sharing development opportunities between all classes and groups of people between the lavish and the poor, between the present and future generations. It is of the view that sustainability demands what it calls intra-generational and inter-generational equity (HRD Nigeria 1996).Capacity building or HRD has other associated benefits and returns. (Umo 1995) has itemized other crucial contributions of human capital to development in customary to includethe generalized condenser to worry economic shocks as well as cope with the complexities of modern developmentcreating a army corps of well informed citizenry with positive attitude to national development,providing persons for util ise science base call for for industrialization2.2 CONCEPT OF PRODUCTIVITYThe most widely accepted commentary of productivity is that it is the ratio of remarks to output. This definition enjoys general acceptableness because of two related considerations. One, the definition what productivity is thought of to be in the context of an enterprise, an exertion or an economy as a whole. Two, paying attentionless of the type of production, economic or political system, this definition of productivity remains the like as long as the basic concept is the relationship between the measuring stick and graphic symbol of goods and services produced and the quality of resources used to produce them.Eatwell and Newman (1991) defined productivity as a ratio of some measure of output to some index of input use. Put differently, productivity is zilch more than the arithmetic ratio between the amount produced and the amount of any resources used to produce them. This idea of productivity goes to imply that it can indeed be perceived as the output per unit input or the efficiency with which resources are used.Olaoye (1985) observed that productivity as a concept can gull two dimensions namely integral factor productivity (TFP) and partial productivity. The former relates to productivity that is defined as the relationship between outputs harvest-feast in productivity provides a significant basis for adequate impart of goods and services thereby improving the welfare of the people and enhancing social progress (Mike Obadan).Demburg (1985) said without productivity there would be no growth in per capita income and inflation control would be more difficult. A country with high productivity is often known for high capacity utilization (optimal use of resources), high standard of living, low rate of unemployment and social progress.productiveness measures the relationship between quantitative and qualitative value of goods and services produced and the measure of resou rces needed to produce them (that is, factor inputs such as parturiency, capital, technology) (Sumbeye, 1992 Okojie 1995 Roberts and Tybout 1997).Mali (1978) defines it as the measure of how resources are brought together in organisations and utilized for accomplishing a set of results. It is reaching the highest level of performance with the least use of resources. In this definition, the issue of efficiency is being referred to. Increased productivity will involve the use of less resources and an consequent of more output.Roberts and Tybout (1997) and Tybout (1992), assuming a neoclassical production function at the sectoral or industry , define come up factor output to be a concave of inputs and time (a proxy for technological innovation). To them, the shot of output with respect to time is the total factor productivity.TFP = Total output / Weighted average of all inputs..1The factor inputs include weary, capital, raw material and purchase of spare parts and so on. In a sp ecial(prenominal) sense, these factors are reduced to the weighted average of drudge and capital (Okojie, 1995 Roberts and Tybout, 1997).Partial productivity (PP) is defined asPP = Total output / partial input.2According to T. M.Yesufu, campaign productivity refers to the output result of workers nonionised inwardly a given economic unit or enterprise. Yesufu outlined the three basic deficiencies associated with the use of grind productivity. They include the followingthe term bray as generally conceived , is ambiguous and far from inclusive. It excludes some very important categories of human inputs, especially management, marketing, accounting and the white collar workers generally, who are not forthwith on the production line.even the acknowledged workforce generally used for parturiency productivity measurement(the blueish cover production line- skilled and unskilled labour) as far from homogenous, which complicates the allocation of output between the constituent clas ses for example , adult and child labour male-female, artisan, technician, etc.the output of an enterprise itself usually varies in footing of type , material inputs, labour mixes, sizes of unit products, etc., that are not easily dis-aggregated.Due to these shortcomings of the use of labour productivity some economists prefer to use total factor productivity as it is said to be capital and more acceptable for purposes of determining enterprise or macroeconomic performance. Partial productivity is particularly used for analytical purposes, to test the relative efficiency of, or returns to, various forms of inputs, and to check, for example, the effect on marginal productivity an increase or reduction of a particular type of input.2.2.1 The Traditional Concept of productivityThe tralatitiousistic concept of productivity focuses on the efficiency in the production or delivery process. In this wise, the focus is merely on the ratio of output to inputs.Thus, productivity is measure d as the amount of output per unit of inputs. Since the emphasis was more generally on labour productivity, the measure was often the amount of output per worker working for one hour.This traditional approach implies a childly Mathematical relationship so that productivity improvement means producing more with less or the very(prenominal) amount of inputs or sustaining the same level of output with less input. This traditional view derives from the economic logic of cost minimization.One tax write-off of this approach is that traditional productivity improvement schemes tend to focus on how to reduce inputs employed and improve the skills of the workers they retain. Workers lay-offs, while seeking to maintain the same levels of output with the reduced work force became popular at enterprise levels.The present policy of the Federal Government to reduce the work force in the customary service is as a result of this traditional logic.2.2.2 New Emerging Concept of Productivitygloba lization and the new forms of competition which it has brought about, however, today require us to focus on a much broader concept of productivity. Likewise, we need to appreciate more fully the changing dynamics of the factors involved in the process of productivity improvement.As a recent analysis points out, increased competitiveness, the increased complexity of markets, the globalisation of manufacturing and the increased concern about social and ecological issues make productivity improvement more important at the same time that the need for a broader meaning of productivity is required.Thus, the focus today is increasingly on total factor productivity and the process of its improvement involves improving the overall business environment. This involves the promotion of better labour-management relations, continuous improvement in products and processes, enhancement of the quality of work life and continuous development of the human resource.In this new conception, the emphasis of the direction to productivity improvement is on increased added value creation, rather than the minimisation of labour inputs.Emphasis has also been brought to bear on the distribution of the benefits of productivity improvement among all stakeholders (workers, employers, consumers).Productivity is not seen any more just as the physical increase in output, but also as the improvement in the quality and value or acceptability of the product or service.Thus, productivity is not just an efficiency concept any more, but equally an effectiveness concept. In an increasingly globalized world, productivity improvement does not just involve the efficient production of products or services, but of products and services that are needed and demanded and bought by very discerning customers. Customer orientation is increasingly in the fore and quality is now an important index of performance. Productivity is becoming identical with quality.2.3 DETERMINANTS OF PRODUCTIVITYA number of factors af fect productivity. Major among these are the complementing factors of production as well as technology/innovation, institutional backup, worker motivation, the quality of labour, environment, etc( U.O. Anyanwu).To discover the effect of each of the cooperating factors on productivity, we have to go into a theoretical world where we can hold other things constant while varying each of these factors one after the other. Here, we are still relying on the theory of diminishing marginal productivity which states that if increasing amounts of a variable factor, scan labour, is applied to a fixed amount of other factors (e.g. impart, capital, materials etc.), given the level of technology then beyond a certain number the extra or marginal product of the variable factor begins to drop cloth down or diminish (Todaro 1985)However, in a real world all the factors impact productivity simultaneously.(a) Land, A Factor of exertion Productivity GrowthLand can affect productivity both quantitat ively and qualitatively. If land is identified as the limiting factor of labour productivity more cultivable land can be brought under cultivation to relax the land constraint. In this regard a number of forest reserves have, for this purpose, to be deforested. The quality of land can be improved through the application of manure and fertilizer, which also increases the yield per hectare. Other methods of farming that make for more yields per hectare of land such as improved seed and grain varieties have been adopted by modern farmers. New land policies that alter tenure ship and ownership are devices for relaxing land constraints and improving productivity.(b) Capital assembling and Labour Productivity.If identified low labour productivity is attributable to lack of capital, capital can be raised through the mobilization of domestic and foreign investment. Acquisition of new factories, equipment, and machinery will lead to increases in productivity and output per capita of the na tion. The Nigerian Governments are committed to the attraction of foreign investments to, among others improve the capital base of the country. However, while the efforts are being made to cover the need for further capital, installed capital such as the melted Natural Gas Project, Petrochemical plants, Refineries and Iron and Steel factories, among others need revitalization if our productivity is to increase.Investment in social and economic infrastructure gives a significant effect to productivity such as roads, electricity, water, sanitation, talk for the facilitation of economic activities.Road networks are needed to bring the additional product to areas of need, while electricity, water, communication, all consort very dominant roles in bringing about the additional product and service arising from the new investment. Dams, irrigation facilities, link and road extensions to interior areas all raise product per hectares of cultivated land. give of chemicals, fertilizers, p esticides, etc. is part of the capital needed enhanced productivity because by raising value of the farm land, productivity is also being improved.(c) technology/ transition and ProductivityMost economists regard technology/innovation as the most important source of growth. engineering is being seen as a new and improved ways of achieving or performing traditional tasks.Technology can be neutral, labour or capital intensive. Technology is said to be labour and capital neutral when higher output levels are achievable using the same quantity and combinations of factor inputs in a production process. Simple innovations such as re-distribution of labour can result in higher output levels, too. On the other hand, technology may be capital intensive or labour intensive if higher levels of output are possible, with more capital or more labour. Use of simple implements such as those of cottage and small scale industries are said to be labour intensive while those such as electronic computer s, automated textile looms, mechanical ploughs, tractors display capital volume (Todaro 1985).In industrialized countries where unit cost of labour is very high and expensive technology choice favors one that is capital intensive or labour saving, while in developing countries such as Nigeria where there is abundance of labour and scarcity of capital, choice of technology gravitates towards those that are labour intensive, and capital saving.There is the fourth aspect of technology called labour or capital augmentation technology. The quality or skill of labour can be augmented by the use of, for example, videotapes, televisions and other electronic communication devices while capital augmentation is said to occur when productivity can be enhanced by the use of be capital goods for instance iron types etc can replace wooden hoes. Today hybrid products such as cassava, rice, etc that give higher yield per hectare are being developed through technological augmentation.(d) Labour de posit Growth and Labour Productivity.Labour Force growth an important part of the population growth stimulates economic growth and productivity growth particularly when growth has not attained its optimum level. A large labour force, all things being equal, means a large population and the latter is potentially a large domestic market, and if well endowed, empowered and developed, a great international market, too. However, much depends obviously on the capacity of the economic system to productively employ the additional workers arising from the population/labour force growth. once more this will equally depend on the rate and kinds of capital accumulation and the availability of related factors such as managerial and administrative skills and competence the level of commitment of the political administration.2.4 IMPACT OF HUMAN CAPITAL schooling ON LABOUR PRODUCTIVTYHuman Capital Development enhances labour productivity and the productive capacity of the economy. Employers regard the qualification arising from capacity building, as a reliable indication of personal ability, achievement get cerebrate for instance that, a graduate must make a better salesman than a man who had never met theHuman Capital Development and Productivity RelationshipHuman Capital Development and Productivity RelationshipABSTRACTThis study examines the relationship between human capital development and productivity. Productivity is the dependent variable while human capital development indicators and gross capital formation are the explanatory variables. Recurrent and capital expenditures on health and education are used as human development indicators. The scope of the study is from1977 to 2003.The Ordinary Least Square method was used to determine this relationship. It has revealed a negative relationship between gross capital formation and productivity.However, human capital development was found to affect productivity significantly. It is therefore advocated to adopt policies that will improve the expenditure on health and education.CHAPTER ONEINTRODUCTION1.1 BACKGROUND OF THE STUDYThe issue of human capital development is of great importance in any economy particularly developing economy such as Nigeria. The twentieth century has become the human capital century. People and skills matter, the wealth of a nation is embodied in its people, that is, the working class. Although advanced countries but the poor countries are becoming more aware of the importance of people the advantage countries but the poor countries are becoming more aware of the importance of people the advancement of the economy. This study is therefore of great significance to the world at large.Labor is one of the four factors of production. The others are capital, land and entrepreneur. In the nineteenth century, people were of little importance to industrial giants such as Britain, Germany, France and the United States. However, in the early 1900 attention began to shift to education of people at secondary and higher levels and provision of welfare services such as health services.The Nigerian economy has however failed to move at the pace of other countries in the world. Although effort have been made in the area of human development in the part, there has not been a substantial improvement in the human capital development in the past, there has not been a substantial improvement in the human capital indicators such as education and health.Productivity can be perceived as the output per unit or the efficiency with which resources are utilized. Therefore productivity with respect to human capital development refers to the development of human capital which will lead to efficiency with which resources are utilized and this will increase output. The trend of productivity in Nigeria is one that fluctuates. Productivity in Nigeria compared to that of other countries is very low.Sustained productivity depends on the economys human capital. Human capital can be define d as the skills, knowledge, competencies, and attributes that reside in a worker. Human capital development involves the improvement of a nations human capital through better healthcare, nutrition, accommodation, working environment, education and training. The economies of nations and the world at large is dynamic in nature, it follows that the human resources of these nations should be constantly improved on. That is, training of manpower should be a continuous process in order to meet up with the demands of the world market.Here, the emphasis is placed on education and health. These can also be referred to as indicators of human capital development on productivity.ducation in Nigeria has improved over the years with increased interest in the tertiary institution. However, a closer attention has to be paid to the needs of the educational sector because the quality and level of educational attainment on the productivity of a country. Certain measures have been put in place to impro ve the quality of education in Nigeria by the Federal government and other agencies. However, these efforts have not brought about the much desired change in the standard of the education in Nigeria. Failure in the educational sector has been accounted for due to some problems. They include inadequate allocation by the government to education, lack of dedicated teachers, poor political environment, poor implementation of policies and several others. Private organizations have sprung up to resuscitate the educational sector. This is evident through the increase in private schools in the primary, secondary and even the tertiary level. Nigerians have lost confidence in the ability of the government to provide good education and this has resulted in high patronage of these private institutions by Nigerians who can afford it. This leaves the bulk of Nigerians that cannot afford private education at the mercy of the government funded schools. The government has failed to realize the gravi ty of what an underdeveloped human capital can do to an economy. The need for more attention to be centered on this aspect is very necessary.The health sector is also faced with similar problems as that of education. Health is a very important factor in human capital development. The state of health of labor affects the level of performance thereby affecting the level of productivity. Government has tried in improving health services by reducing the number of population per doctor, providing more health facilities, hospitals and other required health personnel. However, there is still room for improvement in this aspect. The rural areas of the country have been neglected while the urban areas have been focused on, there is still need to reduce the population per doctor, provide preventive healthcare and take drastic measures to reduce the infant maternal mortality.These discrepancies in education and health of the country have a very significant effect on productivity and hence econ omic growth.1.2 STATEMENT OF THE PROBLEMThe Nigerian economy has solved several problems facing it. There has been prolonged economic recession followed by the collapse of the world oil market from the early 1980 and fall in the foreign exchange earnings of the country. Other problems include overdependence on imports for consumption and capital goods, lack of adequate social and economic infrastructure and neglect of the agricultural sector.Nigeria is rated to be one of the poorest countries in the world. Putting the countrys economy back on track requires a lot of activities that will advance the economy such as rebuilding the economy and making goods and services available and affordable for every one. This is where the issue of productivity comes in since productivity refers to the level of output of a country.The problem therefore deals with increase in productivity through human capital development so as to increase growth. This study raises questions on how the indicators of human capital development affect productivity.1.3 SCOPE OF THE STUDYThis study covers all sectors of the economy and all countries in the world as the issue of human capital and productivity affects everyone. However, the study is based on the Nigerian economy and all considerations and analysis refers to the Nigerian economy.This study covers the period from 1977 to 2004.1.4 OBJECTIVES OF THE STUDYThe major objective of the study is to determine the relationship between human capital development and productivity in the Nigerian economy through the use of two human capital development indicators education and health.The specific objectives includeTo ascertain the relationship between human capital development and productivityTo examine the impact of health on the productivity in the Nigerian economy.To examine the impact of education on productivity in the Nigerian economy.To determine the indicators of human capital development.1.5 JUSTIFICATION OF THE STUDYThis study is relevant t o every sector of the economy. This is because every sector of the economy has labor as its most important factor of production. It is therefore of great importance to the industrial, agricultural, mining sector and so on. It gives them more incentive to invest more in their human resources.It is also of great importance to the government who have in their hands the authority and responsibility over important indicators of human capital development. This study will encourage government to increase expenditure on education, health and other areas of the economy that affect productivity.It provides a basis for which investment in health and education will be measured against productivity.This study is therefore of great importance to all sectors of the economy, the government and other stakeholders such as consumers, shareholders and so on.1.6 RESEARCH QUESTIONSThe following questions arise in the course of this study and will subsequently be answered. They include the followingWhat i s the relationship between human capital development and productivity?What is the effect of health on productivity?What is the impact of education on productivity?What are the other factors that lead to the development of human capital?1.7 HYPOTHESIS OF THE STUDYThe following hypotheses hold for this studyH0 Education has the lowest impact on productivityH1 Education has the greatest impact on productivity.H0 Health has no significant impact on productivity.H1 Health has a significant impact on productivity.H0 There is no significant relationship between human capital development and productivity.H1 There is a significant relationship between human capital development and productivity.1.8 RESEARCH METHODOLOGYThe issues to be raised in this research work are both empirical and theoretical.The Ordinary least square method of analyzing data will be used and the results will be interpreted.1.9 DATA SOURCESData was obtained from the Central Bank Statistical Bulletin, 2004.1.1.0 OUTLINE OF CHAPTERSIn order to achieve the stated objectives, the project work has been subdivided into five chapters.Chapter one is the introduction which consists of the background, statement of the problem, objectives, justification, hypotheses, scope, research methodology, organization and limitation of the study.Chapter two is devoted to past literature written on the subject matter.Chapter three is the methodological framework and the model specification.Chapter four is presentation, interpretation and empirical analysis of regression results.Chapter five boarders on the summary, recommendation and conclusion of the study.CHAPTER TWOLITERATURE REVIEW2.1 CONCEPT OF HUMAN CAPITAL DEVELOPMENTHuman resources make up the standard or the basis for the wealth of a country. Human resources are the summation of efforts, skills, knowledge and experience available in a country. It is the managerial, scientific, engineering, technical, craftsmen and other skills which are employed in creating, de signing, developing organizations, managing and operating productive and service enterprises and economic institutions (Yesufu, 1962).They are a nations most valuable resources. They constitute a nations human capital.Human capital refers to the skills, education, health, and training of individuals. It is capital because these skills or education are an integral part of us that is long-lasting, in the way a machine, plant, or factory lasts ( Gary Becker, 1992).Before the nineteenth century, investment in human capital was not important in any country. Expenditures on schooling, health and other forms of investment were quite small. This began to change during that century with the application of science to the development of new goods and more efficient methods of production, first in Britain, and then gradually spreading to other countries.During this century, education, skills, and other knowledge have become crucial determinants of a persons and a nations productivity. One can e ven call the twentieth century the Age of Human Capital in the sense that the primary determinant of a countrys standard of living is how well it succeeds in developing and utilizing the skills, knowledge, health, and habits of its population.It has been estimated that human capital-education, on-the-job and other training, and health-comprises about 80 percent of the capital or wealth in the United States and other advanced countries. (Gary Becker 1992). Therefore a country without effective human capital development skills will be lagging behind in the issue of development.The concept of human capital refers to the abilities and skills of human resources of a country, while human capital formation refers to the process of acquiring and increasing the number of persons who have the skills, education and experience that are critical for economic growth and development of a country (Okojie 199544). Human capital is so important that in the Khartoum Declaration of 1988, it was asserte d that.the human dimension is the sine qua non of economic recovery .no SAP or economic recovery programme should be formulated or can be implemented without having at its heart detailed social and human priorities. There can be no real structural adjustment or economic recovery in the absence of the human imperative (Adedeji 1990390). In other words, there cannot be meaningful economic growth without adequate human resources.Human resources development involves the improvement and the transformation of a nations human resources by better medicare, nutrition, accommodation, environment, education and training (Yesufu, 1962)Human capital development can be described as a deliberate effort by Government and people to provide the right number of workers, at the right areas of need and at the right time in an economy that is incentives that will increase the morale of the workers. For example, in Japan, training of human resources is seen as very important in development of the economy. They also provide incentives that boost the morale of the workers. The government is expected to provide policies or programmes that provide the labour needs and a requirement in all sectors of the economy. The existence of a large population does not translate to a productive resource. Human resources can only be productive due to effort made by the government and the private organisations in developing human resources. Human beings become productive resource or human capital only when they are able and in a position to contribute meaningfully to productive economic activities. They have to be trained to become agents of production and economic activities.Without training they remain passive, potential and inactive as other factors of production. Human beings can be fashioned to lead useful and happy lives and contribute to societal development by the development of their characters and potential abilities through education, training, health services and so on conducted over a lon g period of years.The enterprise of human capital development therefore is the impartibility of knowledge and skills to human beings through education and training for productive as well as consumptive ends (U.O Anyanwu). Education is only one form of investment in human beings. Others include expenditure on medical care, migration to more prosperous regions, information about job opportunities and career prospects and choice of jobs with higher training contents. Human capital development is a form of investment with expected economic as well as social returns not only to the individual investor and his family but also the society at large.The economy, with time, begins to experience growth, while the beneficiary acquires the opportunity to contribute to and secure qualitative live by being able to make the right choices and command higher earnings profile.Consequently human capital development has been seen as the ultimate concern of all types of development-economic, social, cult ural, political, etc. Capacity building or human capital development responds to a wide-range of questions such as what people are able to be or do, the issues longevity, health and mind development, their inalienable fundamental human rights to freedom of choice, speech, association, political, economic, social and other needs and ability to escape from avoidable diseases, malnourishment and illiteracy (HDR Nigeria 1996).Human Development Report (1996) maintains that sustainability of human capacity building is the essential component of the ethics of universalism of life, stressing that it is a matter of sharing development opportunities between all classes and groups of people between the rich and the poor, between the present and future generations. It is of the view that sustainability demands what it calls intra-generational and inter-generational equity (HRD Nigeria 1996).Capacity building or HRD has other associated benefits and returns. (Umo 1995) has itemized other crucial contributions of human capital to development in general to includethe generalized capacity to absorb economic shocks as well as cope with the complexities of modern developmentcreating a corps of well informed citizenry with positive attitude to national development,providing persons for technology base needed for industrialization2.2 CONCEPT OF PRODUCTIVITYThe most widely accepted definition of productivity is that it is the ratio of inputs to output. This definition enjoys general acceptability because of two related considerations. One, the definition what productivity is thought of to be in the context of an enterprise, an industry or an economy as a whole. Two, regardless of the type of production, economic or political system, this definition of productivity remains the same as long as the basic concept is the relationship between the quantity and quality of goods and services produced and the quality of resources used to produce them.Eatwell and Newman (1991) defined produc tivity as a ratio of some measure of output to some index of input use. Put differently, productivity is nothing more than the arithmetic ratio between the amount produced and the amount of any resources used to produce them. This conception of productivity goes to imply that it can indeed be perceived as the output per unit input or the efficiency with which resources are used.Olaoye (1985) observed that productivity as a concept can assume two dimensions namely total factor productivity (TFP) and partial productivity. The former relates to productivity that is defined as the relationship between outputsGrowth in productivity provides a significant basis for adequate supply of goods and services thereby improving the welfare of the people and enhancing social progress (Mike Obadan).Demburg (1985) said without productivity there would be no growth in per capita income and inflation control would be more difficult. A country with high productivity is often known for high capacity uti lization (optimal use of resources), high standard of living, low rate of unemployment and social progress.Productivity measures the relationship between quantitative and qualitative value of goods and services produced and the quantity of resources needed to produce them (that is, factor inputs such as labour, capital, technology) (Sumbeye, 1992 Okojie 1995 Roberts and Tybout 1997).Mali (1978) defines it as the measure of how resources are brought together in organisations and utilized for accomplishing a set of results. It is reaching the highest level of performance with the least use of resources. In this definition, the issue of efficiency is being referred to. Increased productivity will involve the use of less resources and an outcome of more output.Roberts and Tybout (1997) and Tybout (1992), assuming a neoclassical production function at the sectoral or industry , define total factor output to be a concave of inputs and time (a proxy for technological innovation). To them, the elasticity of output with respect to time is the total factor productivity.TFP = Total output / Weighted average of all inputs..1The factor inputs include labour, capital, raw material and purchase of spare parts and so on. In a particular sense, these factors are reduced to the weighted average of labour and capital (Okojie, 1995 Roberts and Tybout, 1997).Partial productivity (PP) is defined asPP = Total output / partial input.2According to T. M.Yesufu, labour productivity refers to the output result of workers organised within a given economic unit or enterprise. Yesufu outlined the three basic deficiencies associated with the use of labour productivity. They include the followingthe term labour as generally conceived , is ambiguous and far from inclusive. It excludes some very important categories of human inputs, especially management, marketing, accounting and the white collar workers generally, who are not directly on the production line.even the acknowledged workforce gen erally used for labour productivity measurement(the blue coated production line- skilled and unskilled labour) as far from homogenous, which complicates the allocation of output between the constituent classes for example , adult and child labour male-female, artisan, technician, etc.the output of an enterprise itself usually varies in terms of type , material inputs, labour mixes, sizes of unit products, etc., that are not easily dis-aggregated.Due to these shortcomings of the use of labour productivity some economists prefer to use total factor productivity as it is said to be superior and more acceptable for purposes of determining enterprise or macroeconomic performance. Partial productivity is particularly used for analytical purposes, to test the relative efficiency of, or returns to, various forms of inputs, and to check, for example, the effect on marginal productivity an increase or reduction of a particular type of input.2.2.1 The Traditional Concept of ProductivityThe tra ditional concept of productivity focuses on the efficiency in the production or delivery process. In this wise, the focus is merely on the ratio of output to inputs.Thus, productivity is measured as the amount of output per unit of inputs. Since the emphasis was more generally on labour productivity, the measure was often the amount of output per worker working for one hour.This traditional approach implies a simple Mathematical relationship so that productivity improvement means producing more with less or the same amount of inputs or sustaining the same level of output with less input. This traditional view derives from the economic logic of cost minimisation.One implication of this approach is that traditional productivity improvement schemes tend to focus on how to reduce inputs employed and improve the skills of the workers they retain. Workers lay-offs, while seeking to maintain the same levels of output with the reduced work force became popular at enterprise levels.The prese nt policy of the Federal Government to reduce the work force in the public service is as a result of this traditional logic.2.2.2 New Emerging Concept of ProductivityGlobalisation and the new forms of competition which it has brought about, however, today require us to focus on a much broader concept of productivity. Likewise, we need to appreciate more fully the changing dynamics of the factors involved in the process of productivity improvement.As a recent analysis points out, increased competitiveness, the increased complexity of markets, the globalisation of manufacturing and the increased concern about social and ecological issues make productivity improvement more important at the same time that the need for a broader meaning of productivity is required.Thus, the focus today is increasingly on total factor productivity and the process of its improvement involves improving the overall business environment. This involves the promotion of better labour-management relations, conti nuous improvement in products and processes, enhancement of the quality of work life and continuous development of the human resource.In this new conception, the emphasis of the direction to productivity improvement is on increased added value creation, rather than the minimisation of labour inputs.Emphasis has also been brought to bear on the distribution of the benefits of productivity improvement among all stakeholders (workers, employers, consumers).Productivity is not seen any more just as the physical increase in output, but also as the improvement in the quality and value or acceptability of the product or service.Thus, productivity is not just an efficiency concept any more, but equally an effectiveness concept. In an increasingly globalized world, productivity improvement does not just involve the efficient production of products or services, but of products and services that are needed and demanded and bought by very discerning customers. Customer orientation is increasing ly in the fore and quality is now an important index of performance. Productivity is becoming identical with quality.2.3 DETERMINANTS OF PRODUCTIVITYA number of factors affect productivity. Major among these are the complementing factors of production as well as technology/innovation, institutional backup, worker motivation, the quality of labour, environment, etc( U.O. Anyanwu).To discover the effect of each of the cooperating factors on productivity, we have to go into a theoretical world where we can hold other things constant while varying each of these factors one after the other. Here, we are still relying on the theory of diminishing marginal productivity which states that if increasing amounts of a variable factor, say labour, is applied to a fixed amount of other factors (e.g. land, capital, materials etc.), given the level of technology then beyond a certain number the extra or marginal product of the variable factor begins to fall down or diminish (Todaro 1985)However, in a real world all the factors impact productivity simultaneously.(a) Land, A Factor of Labour Productivity GrowthLand can affect productivity both quantitatively and qualitatively. If land is identified as the limiting factor of labour productivity more arable land can be brought under cultivation to relax the land constraint. In this regard a number of forest reserves have, for this purpose, to be deforested. The quality of land can be improved through the application of manure and fertilizer, which also increases the yield per hectare. Other methods of farming that make for more yields per hectare of land such as improved seed and grain varieties have been adopted by modern farmers. New land policies that alter tenure ship and ownership are devices for relaxing land constraints and improving productivity.(b) Capital Accumulation and Labour Productivity.If identified low labour productivity is attributable to lack of capital, capital can be raised through the mobilization of domest ic and foreign investment. Acquisition of new factories, equipment, and machinery will lead to increases in productivity and output per capita of the nation. The Nigerian Governments are committed to the attraction of foreign investments to, among others improve the capital base of the country. However, while the efforts are being made to cover the need for further capital, installed capital such as the Liquefied Natural Gas Project, Petrochemical plants, Refineries and Iron and Steel factories, among others need revitalization if our productivity is to increase.Investment in social and economic infrastructure gives a significant effect to productivity such as roads, electricity, water, sanitation, communication for the facilitation of economic activities.Road networks are needed to bring the additional product to areas of need, while electricity, water, communication, all play very dominant roles in bringing about the additional product and service arising from the new investment. Dams, irrigation facilities, bridges and road extensions to interior areas all raise product per hectares of cultivated land. Use of chemicals, fertilizers, pesticides, etc. is part of the capital needed enhanced productivity because by raising value of the farm land, productivity is also being improved.(c)Technology/Innovation and ProductivityMost economists regard technology/innovation as the most important source of growth. Technology is being seen as a new and improved ways of achieving or performing traditional tasks.Technology can be neutral, labour or capital intensive. Technology is said to be labour and capital neutral when higher output levels are achievable using the same quantity and combinations of factor inputs in a production process. Simple innovations such as re-distribution of labour can result in higher output levels, too. On the other hand, technology may be capital intensive or labour intensive if higher levels of output are possible, with more capital or more l abour. Use of simple implements such as those of cottage and small scale industries are said to be labour intensive while those such as electronic computers, automated textile looms, mechanical ploughs, tractors display capital intensity (Todaro 1985).In industrialized countries where unit cost of labour is very high and expensive technology choice favors one that is capital intensive or labour saving, while in developing countries such as Nigeria where there is abundance of labour and scarcity of capital, choice of technology gravitates towards those that are labour intensive, and capital saving.There is the fourth aspect of technology called labour or capital augmentation technology. The quality or skill of labour can be augmented by the use of, for example, videotapes, televisions and other electronic communication devices while capital augmentation is said to occur when productivity can be enhanced by the use of existing capital goods for instance iron types etc can replace wood en hoes. Today hybrid products such as cassava, rice, etc that give higher yield per hectare are being developed through technological augmentation.(d) Labour Force Growth and Labour Productivity.Labour Force growth an important part of the population growth stimulates economic growth and productivity growth particularly when growth has not attained its optimum level. A large labour force, all things being equal, means a large population and the latter is potentially a large domestic market, and if well endowed, empowered and developed, a great international market, too. However, much depends obviously on the capacity of the economic system to productively employ the additional workers arising from the population/labour force growth. Again this will equally depend on the rate and kinds of capital accumulation and the availability of related factors such as managerial and administrative skills and competence the level of commitment of the political administration.2.4 IMPACT OF HUMAN CAPITAL DEVELOPMENT ON LABOUR PRODUCTIVTYHuman Capital Development enhances labour productivity and the productive capacity of the economy. Employers regard the qualification arising from capacity building, as a reliable indication of personal ability, achievement drive reasoning for instance that, a graduate must make a better salesman than a man who had never met the