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Does Foreign Aid Accelerate Economic Growth? An Empirical Analysis for Nigeria

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  • Ismail O. FASANYA

    (Department of Economics, University of Ibadan, Nigeria)

  • Adegbemi B.O ONAKOYA

    (Department of Economics, College of Social and Management Sciences,Tai Solarin University of Education, Ijagun, Nigeria)

Abstract

This paper analyses the impact of foreign aid on economic growth in Nigeria during the period of 1970-2010. The empirical analysis rests on the neo-classical modelling analytical framework and combined several procedures in modern econometric analysis/estimation techniques. Our findings shows that aid flows has significant impact on economic growth in Nigeria: domestic investment increased in response to aid flows and population growth has no significant effect on aid flows. Aid flows also provides free resources to increase domestic investment, thus confirming the aid-policygrowth hypothesis. Therefore, donor governments should be aware of the political situations in recipient countries, and work with international bodies to ensure as much stability as possible. Finally, foreign aid transfers should henceforth pledge to abide by the oath to of doing no harm.

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Bibliographic Info

Article provided by Econjournals in its journal International Journal of Economics and Financial Issues.

Volume (Year): 2 (2012)
Issue (Month): 4 ()
Pages: 423-431

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Handle: RePEc:eco:journ1:2012-04-5

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Related research

Keywords: Foreign Aid; Policy; Modelling; Economic Growth; Nigeria;

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  1. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
  2. Mosley, Paul & Hudson, John & Horrell, Sara, 1987. "Aid, the Public Sector and the Market in Less Developed Countries," Economic Journal, Royal Economic Society, vol. 97(387), pages 616-41, September.
  3. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
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