Foreign aid, public expenditure and economic growth: The Nigerian case

Abstract

Foreign aid represents an important source of finance in most countries in Sub-Sahara Africa (SSA), including Nigeria, where it supplements low savings, narrow export earnings and thin tax bases. In fact, foreign aid is considered to be a major supplement to government expenditure in Nigeria. As a result, foreign aid can have positive effect on economic growth, through public expenditure if properly channeled to the productive sectors of the economy. This paper therefore seeks to investigate the impact of foreign aid and public expenditure on economic growth in Nigeria. It reveals that foreign aid and public expenditure impact positively on the economic growth in Nigeria, with foreign aid indicating a very significant impact on growth. © 2011 The Clute Institute.