Governance and Human Development in Nigeria: An Empirical Analysis of Institutional Effectiveness and Welfare Outcomes

Abstract

Building on the hypothesis that a country's governance quality is crucial for sustainable development, we examined the human development implications of good governance in Nigeria, focusing on the United Nations Development Programme (UNDP) Human Development Index (HDI). We measured good governance using key World Bank Worldwide Governance Indicators (WGIs), including government effectiveness, regulatory quality, rule of law, and control of corruption. Data for the variables were sourced from the World Bank and the UNDP Human Development Report. The datasets were analysed using the least squares estimation method, descriptive statistics, and pre-estimation and diagnostic tests. The findings revealed that government effectiveness has a positive, significant impact on HDI in the short term, suggesting that improving government effectiveness is associated with immediate improvements in human development. Similarly, the regulatory quality index has a significantly positive impact on HDI, indicating that improvements in regulatory quality are associated with potential rather than immediate gains in HDI. However, there is evidence of a long-term positive effect of the rule of law on HDI, suggesting that improvements in legal frameworks, judicial independence, contract enforcement, and property rights significantly enhance human development outcomes in Nigeria. Conversely, corruption control has a negative impact on HDI, highlighting the ineffectiveness of anti-corruption strategies in promoting human development outcomes in Nigeria. Given the findings, this study recommends, among other things, that the government should prioritise institutional reforms to improve the quality of public service delivery, particularly in health, education, and living standards, to foster human development in Nigeria.