Impact of Aid on Economic Growth in Nigeria

Abstract

This chapter examines the impact of aid on economic growth in Nigeria. The study employed various econometric techniques such as Augmented Dickey-Fuller (ADF) test, Granger causality test and Johansen cointegration test using time series data spanning from 1981-2017. The findings of the study reveal that foreign aid has a significant impact on economic growth in Nigeria, while the results of the Granger causality Wald test show the existence of a short-run causal effect between foreign aid and economic growth in Nigeria. The result equally shows that foreign direct investment exhibits a negative and nonsignificant impact on the economy, export showed negative and significant impacts on the economy. On the other hand, the rising import had a significant impact on economic growth in Nigeria. For Nigeria to make the best use of aid, the study recommends the implementation of sound macroeconomic policies that will aid in strengthening institutional weaknesses and the promotion of good governance with equity.