This paper is set to empirically investigate the dynamics of tax revenue and human capital development in accelerating the rate of diversification of the Nigerian economy in view of de-escalating the role of petroleum in the global economy. To achieve this, Error-Correction Modeling approach was adopted for a period of between 1980 and 2018. This study revealed that the coefficients of human capital development, as captured by Human Development Index (HDI), Ease of Doing Business (EDB), and Tax Revenue (TXR), were all statistically germane, suggesting that these variables were critical in improving the growth rate of the Nigerian economy, hence, significant and pivotal to diversifying the Nigerian economy. Also, from the result, the coefficient of the speed of adjustment indicated that it would take about 71 percent for growth rate of the Nigerian economy to respond to changes in any of the explanatory variables. The paper therefore recommended that adequate measures be put in place towards creating the enabling economic environment that will stimulate foreign and domestic investments, which will improve tax base, thereby contributing to economic growth.
Keywords: Diversification, ease of doing business, resource-rich economies
