Public Expenditure by State Governments and Human Capital Development in Nigeria
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The agitation by state governments in Nigeria for an upward review of revenue allocation to them and the low level of human capital created the need to find out how revenue allocated to states in Nigeria have improved human capital development in the country. Using the panel and partial frontier efficiency(PEF) analyses to examine data sourced from the National Bureau of Statistics and the Federal Ministry of Finance over the period 2011 - 2016, the results indicated that: expenditure of the states from the federation account reduced basic school enrolment and spurred infant mortality level. Expenditure from federation account to states was statistically significant in explaining changes in basic school enrolment and infant mortality rate in Nigeria. Expenditure of states via external debts bears a positive sign with basic school enrolment but has negative relationship with infant mortality rate but was not significant in explaining changes in basic school enrolment and infant mortality rate. Expenditure by states from the Value Added Tax , has positive coefficient with basic school enrolment, but negative relationship with infant mortality rate. VAT was also significant in explaining human capital development in Nigeria. Price level was significant in explaining changes in basic school enrolment but was not significant in explaining changes in infant mortality level. The result further revealed that the impact of government expenditure on human capital development vary significantly amongst states of the federation. This implies that some states performed better than others in utilizing revenue from the federation account in achieving human capital development. Based on these findings, the paper suggests: the practice of fiscal federalism in Nigeria, review of modalities for external borrowing by states government and a stable macroeconomic environment as possible ways of enhancing human capital development in Nigeria.