Impact of foreign aid on economic growth in nigeria pdf

The ardl approach to cointegration bounds test was employed to examine both the long run and short run relationships between aid and economic growth. Identifying if aid flows have contributed to economic growth or growth divergence between a sample of asian and african countries is the purpose of this paper. Impact of foreign aid on economic growth in sierra leone. Impact of agricultural foreign aid on agricultural growth in subsaharan africa a dynamic specification reuben adeolu alabi agrodep working papers contain preliminary material and research results. These revelations have in them a hidden message we need to decipher. So, foreign capital has been regarded as an alternative to bridging the gap. The main type of data used in this study is secondary. This implies that foreign aid is beneficial to nigeria but has not been much felt.

Using data over the period of 19802015, the paper attempts to establish whether aid, in any of its forms, has played a role in economic growth in these countries. The impact of foreign direct investment on economic growth. The result shows that the overall regression was statistically significant at. However, it finds that aid is positively related to. Foreign aid and growth, page 2 introduction the role of foreign aid in the growth process of developing countries has been a topic of intense debate. Foreign aid is an important topic given its implications for poverty reduction in developing countries.

With high levels of corruption, it is possible that aid will be siphoned. Sectoral analysis of the impact of foreign aid on economic growth. More still these two questions show that the impact of foreign aid on economic growth in africa is torn between the ends of a seesaw, that is, highly raised on the side of gdp growth in a shameful coexistence with severely lowered dwindling livelihoods. Corruption, growth, and inequality in africa 185 african countries are large recipients of external aid to spur economic development. However, the study concludes that the presence of foreign direct investment in the ldcs particularly in nigeria is not totally useful. In that case foreign aids had shown positive relation with nigerias economic growth, as increase in domestic investments has positive effect on economic growth of a country.

The impact of foreign direct investment on economic growth in nigeria. Using panel data from 67 countries from 19862005, in two fixed effect models, the study finds that, after controlling for other factors, aid has no positive effect on economic growth. This paper investigates the impact of foreign aid on economic growth in member countries of the economic community of west african states using panel data for 19902009 and a three equation simultaneousequations model. The effect of foreign aid on economic growth in ghana. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well structured. This paper analyzes the effects of foreign aid on the economic growth of developing countries. Their result revealed that foreign direct investment had significant impact on economic growth in nigeria. The study investigated the impact of external debt on economic growth in nigeria for the period 19802012. Sadevs overall objective is to increase the efficiency of swedish development cooperation. Low agricultural output has a negative impact on the economy of nigeria which may result to low capacity utilization in the industry. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well.

It finds overwhelming evidence that aid increases growth and other povertyrelevant variables. This study revisits the aid effectiveness debate quantitatively by investigating the relationship among foreign aid, governance and economic growth in ssa using more recent data from 1996 to 2012 and testing for heterogeneity in aid recipient countries. Effect of external borrowing and foreign aid on economic growth in nigeria ugwuegbe, sebastine ugochukwu1, i. Nonoil export was also found to be positively and significantly impacting to economic growth in nigeria proxied by gdp. Moheyuddin 2 there are many forms of the fcis, which includes the grants, loans, foreign direct investment fdi, export credit, projectnonproject assistance, technical assistance and emergency relief etc. The question whether or not foreign aid enhances economic growth and. Aid disbursements to the region continued to grow throughout the 1960s, 70s and 80s, until a major decline in multilateral and bilateral aid disbursements in the mid 1990s. The world economic forum is an independent international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. He found that foreign aid contributed to economic growth between 1970 and 1980 in ldc. The official development assistance, in form of foreign aid. The quest for economic growth and development compelled nigeria to acquire external debt. One purpose of the report is to investigate whether foreign aid improves the efficiency of resource use in a country in the short term. Other important drivers of economic growth include interest rate. Iyoha1 this study examines the nexus between foreign trade and economic growth in nigeria using quarterly timeseries data for 1981q1 through 2010q4.

The main objective is to contribute to a better understanding of the reality of aidgrowth relationship in vietnam, how and through which channels aid may influence outcomes, and what make aid works better or less well. Pdf the effect of foreign aid on economic growth in. In order to fully account for feedbacks, a vector autoregressive model is utilized. Foreign aid, governance and economic growth in subasaharan. Saharan africa ssa has been receiving foreign aid for many decades. This paper analyses the impact of foreign aid on economic growth in nigeria during the period of 19702010. This sadev report is part of the wider project theme. Department of economics, mcpherson university, ogun state, nigeria. Another reason for focusing on ssa is that foreign aid to the region is expected to increase substantially in the next few years. Foreign aid, economic growth and efficiency development oecd. This study examines the effect of foreign aid on economic growth and corruption in developing countries. Effect of foreign direct investment on economic growth in. Some scholars notwithstanding, have argued that foreign aid enhances economic growth through capital generation agbile, 2011, while some others like okpara, 2012 posit that inflow of foreign aid deteriorates economic power of a developing economy like nigeria. External debt, official development assistance, economic growth.

Reports from the world bank show that out of the 700 million people who were pulled out of poverty between 1981 and 2010, 627 million of them were in china. Impact of foreign direct investment on nigeria economic. Does foreign aid have an effect on economic growth. The results indicate that foreign aid donations do have a positive impact on the economic growth of the recipient nation. It was because of the deteriorating situation in africa, and the need to find a way out of that situation, that a group of development research institutes jointly. This paper investigates the impact of taxation on economic growth in south africa.

The first objective that examines the effect of foreign aid on economic growth is. May 25, 2016 moreover, world economic forum 2005, african development bank, world food programme and international fund for agriculture and development are often credited for assisting in the development of overall infrastructure in uganda, and promoting economic growth through various aid programmes and a series of debt relief initiatives. The effect of foreign aid on economic growth among these ecowas countries was found to be positive and strong. Foreign reserve also has a positive and significant impact on economic growth. In the shortrun, only foreign aid has positive impact on economic growth. Foreign aid is hurting, not helping subsaharan africa. Foreign aid and the planning approach to economic development. Usman 1998 highlighted reasons for the slow economic progress in nigeria to include monocultural economy, high population growth rate, import dependency, political instability etc. Does foreign aid contribute to or impeded economic growth. It also reveals that foreign direct investment, foreign aid and foreign trade have positive longrun impacts on economic growth in nigeria.

The effect is extremely modest, however, and other factors such as armed conflict and geography can easily mitigate this impact, in some cases to the extent that foreign aid becomes detrimental to economic growth. Pdf on jan 1, 2014, fredrick onyebuchi asogwa and others published the impact of foreign direct investment on economic growth in nigeria. This paper concludes that the effect of foreign aid on economic growth is positive, permanent, and statistically significant. The granger causality results provide evidence of both shortrun and longrun causality running from foreign aid and foreign trade. The results indicated that foreign capital inflows stimulates growth. In nigeria some authors had examined the performance of foreign trade and economic growth. Pdf impact of foreign aid on the economic development of. According to burnside and dollar 1997, the positive impact of foreign aid on growth in ldcs is subject to the country having good fiscal, monetary and trade policies, thus, the introduction of economic policies into their economic equation. Impact of foreign direct investment, aid and trade on.

The foreign aid to education has a positive impact on nigerian edu. Statistical bulletin, annual reports and statement of accounts. Impact of foreign aid on economic growth in africa the. In the research, growth accounting analysis is conducted. For instance, oyejide 1974, using nigeria, as a laboratory test ground that an increase in export proceeds could lead to an expansion. The empirical analysis rests on the neoclassical modelling analytical framework and combined several procedures in modern econometric. Hence bulk of such funds foreign aid are been channelled to meeting recurrent or consumption expenditure needs of the country at the expense of productive investments. Foreign aid, economic growth and efficiency development. Does foreign aid in education promote economic growth. Previous empirical studies on foreign aid and economic growth generate mixed results. Foreign aid and economic growth in subsaharan africa.

Fasanya and onakoya 2012 studys findings shows that aid flows have significant impact on economic growth in nigeria. Economic growth and the volatility of foreign aid index of. The study suggests that measures should be taken by the managers of the. Bacha, a threegap model of foreign aid transfers and the gdp growth rate in developing countries journal of development economics 32. There is an ongoing debate about the impact of international aid on growth, particularly in developing countries.

Economic development and the effectiveness of foreign aid. Other important drivers of economic growth include. The effect of foreign aid on economic growth in developing. There are clearly, several different variables that influence the effect of foreign aid on economic growth, though since the aim of this study is specifically whether foreign aid yields or prevents economic growth i have chosen the variables i find suitable for my study.

Pdf the study researched into the impact of foreign aid fa on the economic development of nigeria since the literature is yet to reach an. Burnside and dollar 2000 suggested that good fiscal. Many studies have tried to assess the effectiveness of aid at the micro and macrolevel. This is because foreign aid provides funds from other parts of the. In all, the study is of the affirmative on the nexus and impact of international trade on economic growth in nigeria. Whilst aid may have been associated with improvement in economic growth in the country, its impact during the period of war is found to be either weak or nonexistent. An analysis of the economic growth in asia over the past decades, which has received little foreign aid in comparison to africa, is a good starting point. Evidence of ineffective foreign assistance is widespread in africa. By implication, therefore, it can be inferred that poverty would be higher in the absence of aid. Sachs argues that foreign aid constitutes an important instrument to reduce poverty and foster development, while easterly suggests that foreign aid fails to reach the poor. Time series data on external debt stock and external debt service was used to capture external debt burden. Foreign aid, economic growth and efficiency development preface preface the swedish agency for development evaluation sadev is a governmentfunded institute that conducts and disseminates evaluations of international development cooperation.

The impact of taxation on economic growth in south africa. The present thesis investigates the relationship between foreign aid and economic growth in vietnam from 1993 to 2012. This finding is found to be robust across approaches and specifications. This paper uses time series data from 1972 to 2012 on ghana to test the hypothesis that foreign aid can promote growth in developing countries. Foreign aid, economic growth and efficiency development, and is the first of a series of studies investigating aid effectiveness in a production theory context. In testing for the impact of foreign aid on the economic growth of nigeria, i am using annual time series data which has its period from 1960 2009 and which is gotten from world bank world development indicators. In testing for the impact of foreign aid on the economic growth of nigeria, i am using annual time series data which has its period from 1960 2009 and which is. Impact of foreign aid on the economic growth of nigeria. Article pdf available january 2014 with 11,349 reads how we measure reads. Corruption, economic growth, and income inequality in africa.

Foreign aid, governance and economic growth in sub. New evidence on the impact of foreign aid on economic growth by ramesh durbarry, norman gemmell and david greenaway abstract foreign aid inflows have grown significantly in the postwar period. In the 1960s, nigeria was on a par, in terms of aspirations to attain a very high level of economic growth and development, with its fellowoil producing and exporting countries such as malaysia and indonesia, but has since failed to keep pace with them. Ogbokor 2001, investigated the macroeconomic impact of. Impact of foreign direct investment on nigeria economic growth. Impact of agricultural foreign aid on agricultural growth. Incorporated as a notforprofit foundation in 1971, and headquartered in geneva, switzerland, the forum is tied to no political, partisan or national interests. Yearly data for south africa for the period 1981 2016 was used to develop the autoregressive distribution lag ardl approach. Effectiveness of foreign aid on the growth of the agricultural sector. New evidence on the impact of foreign aid on economic growth. The debate on how aid can be effective and contribute to africas development is, however, still ongoing without any clear way forward.

Effect of foreign aid on educational development in nigeria. The empirical results confirm that there is a negative relationship between taxes and economic growth in south africa. Consequently, for any country, like nigeria, with this investment gap to achieve a desired rate of economic growth, foreign aid has to be given due consideration. The study uses annual data on a group of 85 developing countries covering asia, africa, and latin.

The study set out to test for both a long run and causal relationship between external debt and economic growth in nigeria. The impact of foreign aid on economic growth in ecowas. Foreign aid, human capital and economic growth nexus journal of. Levy 1988 investigated the impact of aid on economic growth in subsaharan african and concluded that a positive relationship exists between aid and economic growth. The impact of foreign direct investment on the nigerian. Aid effectiveness will therefore continue to occupy a central position in the debate on development in africa. Nov 08, 2016 a growth model via the ordinary least square method was used to ascertain the relationship between fdi and economic growth in nigeria. A study by karras 2006 investigates the correlation between foreign aid and growth in per capita gdp using annual data from the 1960 to 1997 for a sample of 71 aidreceiving developing countries. Jeffrey sachs and william easterly represent the two primary strains of thought in this debate. The results of the bounds test showed that there is cointegration between foreign aid and economic.