IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 8 NO. 5 2022
DOI: https://doi.org/10.56201/jafm.v8.no5.2022.pg45.53

---

Foreign Aid, Domestic Savings and Investment: Implications for Nigeria

Okore Amah Okore, PhD, Anthony Odinakachukwu Nwadiubu, PhD

---

Abstract

The study examined the implications of foreign aid on domestic savings and investments in Nigeria. The scope of the study covered a period from 1987 to 2019. The hypotheses were tested using the E-view statistical software adopting the Ordinary Least Square (OLS) method on the regression models adopted. The signs and significance of the regression coefficients and the probability were relied upon in explaining the nature and influence of the independent variable on the dependent variable as to determine both magnitude and direction of impact. In the analysis we relied on the following statistical tools; Correlation Coefficient (R), Coefficient of Determination (R2), probability and the student (t) test. The hypotheses were tested at 0.05 (5%) level of significance. Results of the findings revealed that: Foreign aid had positive and significant impact on Gross Domestic Product (GDP), Foreign aid had positive and significant impact on domestic savings and Foreign aid had positive and significant impact on domestic investment in Nigeria within the period under review. The study concluded that, the contribution of foreign aid to growth can be magnified if Nigeria focuses on implementing effective macroeconomic policies. It is therefore recommended that, policies that strengthen the state and its institutions such as institutional development, human capital development, investment targeting, diversification of the Nigerian economy, a stable and trust worthy political environment, monitoring and evaluation on the use of aid funds and other aid-friendly domestic policies should be promoted.

keywords:

Implications, Foreign Aid, Domestic Savings, Investment, Nigeria

---

References:

Ajayi, L.B. & Oke, M.O. (2012). Effect of external debt on economic growth and development
of Nigeria. International Journal of Business and Social Science, 3(12), 297-304.

Akonor K (2008). Foreign Aid to Africa: A Hollow Hope? International Law and Politics 40:
1071.

Boone, P. (1996). Politics and the Effectiveness of Foreign Aid. European Economic Review.
40(2), 289-329.

Burnside, C. & Dollar, D. (2000). Aid, Policies, and Growth. American Economic Review. 90(4),
847-868.

Chukwuemeka, E. E. O; Okechukwu, E. and Uchechi, B. O. (2012): Foreign Aid to Nigeria and
Domestic Obstacles: A Review of Anambra State Education Sector, Africa’s Public
Service Delivery & Performance Review, 52-81

Fasanya, I. O. & Onakoya, A. B. O. (2012), Does Foreign Aid Accelerate Economic Growth? An
Empirical Analysis for Nigeria, International Journal of Economics and Financial Issues.
2(4): 423-431

Ishmail, F. & Adegbemi, O. (2012). Does Foreign Aid Accelerate Economic Growth? An
Empirical Analysis for Nigeria, International Journal of Economics and Financial Issues,
2(4): 423-431

Jensen, P.S., Paldam, M. (2003), "Can the New Aid-Growth Models Be Replicated?," Working
Paper No. 2003–17, Institute for Economics: Aarhus.

Morrisey, O. (2001). Does Aid Increase Growth in Cameroon. Progress in Development Studies,
1, 37–50.

Mosley, P 1980, “Aid, Savings, and Growth Revisited’’ Bulletin of the Oxford university
Institute of Economics and Statistics, ( 42) 6 79-96.

Njeru, J. 2003, The Impact of Foreign Aid on Public Expenditure: The Case of Kenya, AFRC
Research paper No. 135. African Economic Research Consortium, Nairobi, Kenya.

Nwosu, U.C. (2018). Nigeria’s economic growth: does foreign aid really matter? (Master’s
Thesis, University of Sheffield). https:// www.researchgate.
net/publication/327765899_Nigeria_ Foreign-Aid. Retrieved on 12th September, 2021

Odusanya, I. A., Logile, A. I., & Akanni, L. O. (2011). Foreign Aid, Public Expenditure And
Economic Growth: The Nigerian Case. Journal of Applied Business Research (JABR),
27(3), 33-42.

Olanrele, I.A. & Ibrahim, T.M., (2015). Does Developmetal Aid Impact or Impede on Growth:
Evidence from Nigeria. International Journal of Economics and Financial Issues. 5(1),
288-296.

Reddy, S.G. and Minoiu, C., (2006). Development Aid and Economic Growth: A Positive Long
Run Relation. DESA Working Paper. ST/ESA/2006/DWP/29

Tamer, R. (2012). Foreign aid and development: What can Developing Nations Learn. Journal of
Economics and Economic Education Research 13-22

Todaro MP (1977). Economics for a Developing World. Harlow: Essex, Longman.

Todaro M.P. & Smith, C.S. (2011). Economic Development, Eleventh Edition, Boston, Pearson
Addison Wesley

Ugwuegbe, S. U.; Okafor, I. G. & Akarogbe, C. (2016). Effect of External Borrowing and
Foreign Aid on Economic Growth in Nigeria, International Journal of Academic
Research in Business and Social Sciences, 6(4): 155-175

Ukpong, U. A. (2017). Foreign Aid and African Development: Lessons from Nigeria, Journal of
Political Sciences & Public Affairs, 5(3): 274-276.

DOWNLOAD PDF

---

Back