Sustaining Economic Growth: The Roles of Human Capital Investment, Physical Capital, and Price Stability
Sustaining Economic Growth: The Roles of Human Capital Investment, Physical Capital, and Price Stability

Summary/Abstract: Sustaining economic growth in Nigeria requires deliberate investment strategies and stable macroeconomic foundations rather than reliance on headline indicators. This study examines the drivers of long-run growth by focusing on human capital investment, physical capital accumulation, and price stability. Using annual data (1991 - 2023), the analysis employs the Autoregressive Distributed Lag bounds-testing framework and an Error Correction Model to distinguish long-run relationships from short-run dynamics. The results indicate that education expenditure and physical capital significantly promote real GDP growth in the long run, whereas health expenditure and inflation exert persistent growth-reducing effects, reflecting inefficiencies and macroeconomic instability. The error correction term suggests a 34% annual convergence toward equilibrium. Policy implications stress prioritizing education and infrastructure, improving efficiency in health spending, and strengthening credible monetary frameworks to ensure coordinated and sustainable growth.

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