Human capital development as the missing link between tax reforms and manufacturing performance: Evidence from Nigeria using bootstrap and nonlinear autoregressive distributed lag (ARDL) modelling

This study examines the impact of tax reforms on manufacturing sector performance in Nigeria from 1990 to 2023, foregrounding the moderating role of human capital development as a central concern for education policy and workforce governance. The study is theoretically anchored in Neoclassical Investment Theory, Endogenous Growth Theory, and Human Capital Theory, which jointly frame tax reform, physical capital formation, and human capital accumulation as complementary drivers of manufacturing performance. Drawing on secondary data from the Central Bank of Nigeria and World Development Indicators, the research employs an Autoregressive Distributed Lag (ARDL) bounds testing approach augmented with a novel reform intensity index and bootstrap small-sample corrections. The study positions education systems and skills development infrastructure as critical transmission mechanisms through which fiscal policy generates or fails to generate sustainable industrial growth. The ARDL bounds test confirms a long-run equilibrium (F = 9.341). Bootstrap-corrected estimates reveal a significant error correction term (−0.709, p = 0.042), indicating 71% annual adjustment towards equilibrium. Long-run estimates from the human capital-augmented model show that investment (β = 38.46, p = 0.045), tax reform intensity (β = 75.22, p = 0.046), and human capital development (β = 22.88, p = 0.034) positively influences manufacturing performance. The significant and positive interaction term between reform intensity and human capital (β = 12.35, p = 0.038) confirms that fiscal policy effectiveness is contingent on education and training quality. Non-linear ARDL results confirm asymmetric effects for tax revenue and exchange rate. Granger causality establishes unidirectional links from human capital, inflation, and investment to manufacturing performance. The study concludes that tax reforms foster long-term industrial growth only when implemented alongside strategic investments in human capital. Recommendations address education managers, policymakers, and Technical and Vocational Education and Training (TVET) administrators, emphasising curriculum alignment, institutional capacity-building, and public-private partnerships.