Effect of Government Expenditure on Human Capital Development in Kaduna State (1990 2015) An Application of ARDL Model
This study investigates the effect of government expenditure on human capital development in Kaduna state from 1990 to 2015. Secondary data were obtained from Kaduna state Ministry of Budget and Planning, Cooperate Affairs Commission, National Youth Service Corps and Kaduna state Ministry of Health on; government expenditure on education and health, creative citizens, number of graduates and life expectancy at birth respectively. Also an index for human capital development was created using three pillars; creative citizens, number of graduates and healthy citizens using principal component analysis (PCA) The Auto Regressive Distributed Lag (ARDL) was adopted for the study. Findings of the work suggests that in the shortrun, increase in government spending on education does not stimulate an increase in human capital development which is significant at 5 percent level of significance (t 4.37, p<0.05; t= 2.44, p<0.05) However, it was confirmed that in the long run, there is a positive effect as a 1 percent increase in education expenditure stir up an increase to human capital by 2.79 percent which was found to be significant at 5 percent (t=3.789, p<0.05) Health expenditure was found to had a positive and a statistically significant effect on human capital development in the short run covering the first year and second year (t =3.88, p< 0.05; t=3.56, p<0.005) However, the long run evidence has showed that a 1 percent increase in health expenditure does not increase but rather decrease human capital development by 2.9 percent. The study concludes that government expenditure directly affects human capital development. The under study recommends that the state government should increase its spending on education and health in other to rapidly develop human capital since it is crucial to economic prosperity.