Dynamic linkage between Economic growth and human development: time series evidence from Nigeria

A consensus among academics and policymakers holds that investing in human development not only improves lives, but also by itself promotes stellar economic growth. We investigate these claims by estimating the two-way causality between economic growth and human development in Nigeria over the period from 1961 to 2015. By employing three statistical frameworks (Gregory-Hansen Cointegration, Stock-Watson DOLS and VECM), our estimates suggest the following. First, economic growth and human development share a long run relationship, that is, they are cointegrated. Second, despite the two variables sharing a long run relationship, only economic growth can exercise a positive effect on human development, and no evidence of reverse causality was observable. Far importantly, we prescribe a policy recommendation from these findings.