Saudi Journal of Economics and Finance (SJEF)
Volume-4 | Issue-10 | 492-497
Original Research Article
Investment in Education and Health: Lessons for the Growth Potentials in the COVID-19 Era
Ubong E. Effiong
Published : Oct. 16, 2020
Abstract
The negative effect of the Covid-19 pandemic on the growth potential of the economy, as it affects the health and educational sector serves as an inspiration for this paper to examine the effect of government expenditures on education and health on the economic growth of Nigeria. The study utilized data from the Central Bank of Nigeria statistical bulletin, World Development Indicators, and the Nigeria Centre for Disease Control (NCDC). The dependent variable was gross domestic product, while the explanatory variables include gross fixed capital formation, labour force, and government expenditure on education, government expenditure on health, broad money supply, inflation rate, and exchange rate. The data were analysed using the Bounds test for cointegration and error correction mechanism to investigate both the short run and long run relationship. The Bounds test revealed the existence of a long run relationship between government expenditures on education and health and economic growth. Further, the error correction model revealed that both government expenditures on education and health exert positive and significant effect on economic growth both in the short run and in the long run. The coefficient of the error correction term (0.5833) indicates that 58.33% of the short run disequilibrium is corrected annually. The paper concludes by stating that Nigeria needs to invest massively on the education and health sector so as to make provisions for the necessary infrastructures that could be required for their smooth operations in this period of global pandemic and beyond.