WELFARE IMPLICATIONS OF FOREIGN AID IN NIGERIA

WELFARE IMPLICATIONS OF FOREIGN AID IN NIGERIA

Author by Dr. Ovikuomagbe Oyedele

Journal/Publisher: Iosr Journal Of Economics And Finance

Volume/Edition: 1

Language: English

Pages: 44 - 49

Abstract

This paper examines the effect of foreign aid on welfare levels in Nigeria for the period 1971 to 2010. In order to capture the broad meaning of welfare as discussed in the theoretical framework, life expectancy at birth and household final consumption expenditure per capita are used as proxies for welfare. Employing a cointegration test and an error correction model, the study analyzes the effect of official development assistance plus official aid and total bilateral aid on life expectancy at birth. The results show that official development assistance plus aid and total bilateral aid have no significant effect on life expectancy at birth in the long run and short run. Household final consumption expenditure per capita is not significantly explained by official development assistance plus official aid and total bilateral aid when foreign direct investment is included in the model. However, when foreign direct investment is excluded from the model, total bilateral aid becomes negatively significant. The study concludes that factors responsible for the insignificance and negative impact of foreign aid in the results could include the lack of democracy, political and selfish interests of foreign aid negotiators, corruption and misappropriation in favour of wealthy elites and not the poor. Keywords: Welfare, Foreign Aid, Life expectancy at Birth, Household Final Consumption Expenditure Per Capita.

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