Augmented Solow Case Study

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Theoretical Framework
For the purpose of this study, we are going to use the augmented Solow human-capital-growth model. The theory was chosen due to its existence as an advancement on the traditional Solow growth model. Robert Solow’s initial growth model failed to categorically identify human capital. For that reason, the augmented Solow model was proposed by Mankiw, Romer and Weil in a Publication titled “A Contribution to the Empirics of Economic Growth” 1992. The rationale behind the inclusion of human capital in the model is based on the heterogeneity of labour in the production process of various economies depending their quality of education and skills acquired. This adjustment expedites the applicability of the model and thus, the
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Numerous studies in Nigeria and beyond have been carried out using various econometric techniques with the aim of observing the significance of human capital formation towards the actualisation of economic growth and development. Most of the studies seem to have reached a unanimous conclusion that human capital formation stimulates economic growth and development. A review of some of the empirical literature is provided below;
(Sankay, 2010) Scrutinised the influence of human capital development on GDP in Nigeria between1970 to 2008. Johansen cointegration technique and vector error correction analysis were employed to discover this affiliation. The outcome indicated that human capital development has a significant impact on Nigeria's economic growth.
(Amassoma, 2011) Also studies the causality between human capital Investment and economic growth in Nigeria for sustainable development from 1970 and 2010 using a Vector Error Correction (VEC) and Pairwise Granger causality methodologies. The verdicts of the VAR model and pairwise estimate projected lack of causality between human capital development and economic growth. The study thereby recommended the urgency to improve funding for the education and health
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The study utilised cointegration and vector correction model and arrived at the conclusion that sub-Saharan African countries should encourage school enrolment, increase budgetary allocation in health and education and prioritise skill development in order to achieve desired economic outcomes.
Trying to measure the extent to which Human capital contributes to European economic growth (Menbere Tiruneh, 2011) embraced a panel data approach using data from 1995 to 2009 and arrived the conclusion human capital and economic growth are positively related. The study utilised the OLS regression and Johanssen cointegration

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