The Interactive Effect of Human Capital Development and Oil Revenue on Economic Growth in Nigeria

Nigeria continues to grapple with the challenge of tepid economic growth rate despite several policy interventions, which has necessitated scholarly studies on the drivers of economic growth. However, earlier studies have underexplored the interactive effects of human capital development and oil revenue as the panacea to Nigeria’s economic growth struggles. Thus, this study examines the interactive effect of human capital development and oil revenue on economic growth in the context of Nigeria between 1981 to 2022. This study employed secondary data, using the Autoregressive Distributed Lag method as the technique of estimation. Physical capital stock and technology were utilized as the control variables, grounded by the extended Solow growth model that forms the theoretical underpinning of the study. Findings from the study indicated a complementary relationship between human capital development and oil revenue on economic growth. This presents a sound justification on neither oil revenue nor human capital development alone is sufficient to drive sustainable economic growth in Nigeria. This implies that oil revenue should make provision for the necessary fiscal space and funding needed to invest in human capital development. Furthermore, the study recommends increased commitment to human capital investment particularly in education and health sectors, through the restructuring of the government budgetary allocation. It also speaks to judicious use of oil revenue to foster economic diversification and intra and inter sectoral linkages that promotes productivity. Lastly, the creation of a more skilled workforce in order to reduce poverty rates.