Education and Economic Growth in Nigeria: A Granger Causality Analysis

Abstract

This paper examines the notion that formal education accelerates economic growth using Nigerian data for the period 1980-2005. Time series econometrics (cointegration and Granger Causality Test) are applied to testthe hypothesis of a growth strategy led by improvements in the education sector. The results show that there is cointegration between public expenditures on education, primary school enrolment and economic growth.The tests revealed that public expenditures on education Granger cause economic growth but the reverse is not the case. The tests also revealed thatthere is bi-directional causality between public recurrent expenditures on education and economic growth. No causal relationship was establishedbetween capital expenditure on education and growth and primary school enrolment and economic growth. The paper recommends improved funding for the education sector and a review of the primary school curricula to make it more relevant to the needs of the Nigerian society.Key Words: Education, causality, Growth, cointegration, Expenditure