Long-Run Impact of Public Sector Investment in Education and Health on Nigeria's Economic Performance

Nigeria’s economic performance is intricately linked to its investments in the public sector, particularly education and health. It is therefore against this backdrop that this study examined the long-run impact of public sector investment in education and health on Nigeria’s economic performance between 1986 and 2023, with real GDP (LNRGDP) as the dependent variable, while public investment in education (LNPSIE), public investment in health (LNPSIH), literacy rate (LITR), and life expectancy (LEXP) served as the explanatory variables. The analysis employed the Fully Modified Ordinary Least Squares (FMOLS) estimation technique after confirming stationarity of the variables at first difference and the presence of cointegration among the variables. Data for the study were culled from the Central Bank of Nigeria (CBN) Statistical Bulletin, the World Bank World Development Indicators (WDI), and the National Bureau of Statistics (NBS). The descriptive statistics revealed that all variables were normally distributed, with life expectancy and literacy rate showing relative stability compared to public investment measures. The correlation results indicated strong positive associations between human capital variables and economic growth. The unit root and Johansen cointegration tests confirmed long-run relationships among the variables. The FMOLS results showed that public investment in education exerted a negative and statistically insignificant impact on economic growth, suggesting inefficiencies in the Nigerian education system. Conversely, public investment in health had a positive and significant effect on growth, while literacy rate displayed a positive but weakly significant effect. Life expectancy emerged as the most influential factor, exhibiting a strong and highly significant positive impact on economic growth. The study concluded that human capital development significantly influences Nigeria’s economic growth and thus recommend that government should prioritize efficient education spending, scale up healthcare investment, promote literacy and skills development, enhance life expectancy through health and social policies, and strengthen institutional frameworks to ensure human capital investments translate into sustainable economic growth