Does Institutional Quality Drive Human Capital Development? Dynamic Evidence from Nigeria: An ARDL Approach
Year: 2026
Type: article
Abstract: This study examined the impact of institutional quality on overall human capital development in Nigeria over the period 1984 to 2024. The Autoregressive Distributed Lag (ARDL) bounds testing approach was employed, and complemented by unit root tests, cointegration bounds testing, and post-estimation diagnostics. The unit root results revealed a mixture of I(0) and I(1) variables, justifying the ARDL approach, while the bounds test confirmed a stable long-run relationship among the variables (F-statistic = 4.734, exceeding the upper bound of 3.49). The ARDL results show that institutional quality exerts a positive and statistically significant effect on human capital development both in the long run (coefficient = 0.598, p = 0.017) and through its interaction with government expenditure variables in the short run. The error correction term is negative and significant (–0.163, p < 0.001), confirming convergence to long-run equilibrium at a speed of approximately 16.3 per cent per annum. The study concludes that institutional quality is a critical determinant of human capital accumulation in Nigeria and recommends that government deepen governance reforms, strengthen accountability mechanisms, and intensify anti-corruption measures to improve the conversion of public resources into human capital outcomes.
Institution: Federal University Lafia
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7208817134