Economic Development, Foreign Aid and Poverty Reduction: Paradigm in Nigeria

Foreign aid supplements internal resources required for economic development and growth in less developed countries (LDCs). Foreign inflows have bolstered a number of economic recuperation, reconstruction efforts and structural adjustment programs organized to haul the Africa economy out of a precarious decay. Discussions of foreign aid have concentrated on Africa since it has gotten the best measure of help on per capita premise than some other area; yet economic performance has been the weakest. In any case, economic development, foreign aid and poverty reduction has not enjoyed such interest in literature as it is ordinarily subsumed. This paper tries to build up a model between economic development, foreign aid and poverty reduction and decide if there is even a nexus between these three ideas by analyzing data from Nigeria. Utilized time series secondary data from World Development Indicators (WDI) mulling over Nigeria for the period which data were accessible. The study went on to perform correlation and regression analysis using GNP per capita as proxy for economic development as the dependent variable and poverty headcount(proxy for poverty reduction), gross capital formation, foreign aid, GDP per capita growth, inflation rate and growth of government expenditure as independent variables. It was observed that only gross capital formation have statistically significant reForeign aid supplements internal resources required for economic development and growth in less developed countries (LDCs). Foreign inflows have bolstered a number of economic recuperation, reconstruction efforts and structural adjustment programs organized to haul the Africa economy out of a precarious decay. Discussions of foreign aid have concentrated on Africa since it has gotten the best measure of help on per capita premise than some other area; yet economic performance has been the weakest. In any case, economic development, foreign aid and poverty reduction has not enjoyed such interest in literature as it is ordinarily subsumed. This paper tries to build up a model between economic development, foreign aid and poverty reduction and decide if there is even a nexus between these three ideas by analyzing data from Nigeria. Utilized time series secondary data from World Development Indicators (WDI) mulling over Nigeria for the period which data were accessible. The study went on to perform correlation and regression analysis using GNP per capita as proxy for economic development as the dependent variable and poverty headcount(proxy for poverty reduction), gross capital formation, foreign aid, GDP per capita growth, inflation rate and growth of government expenditure as independent variables. It was observed that only gross capital formation have statistically significant relationship with GNP per capita while growth of government expenditure has the effect on GNP per capita. The results reveal that there is a positive relationship between economic development, foreign aid and poverty reduction. This implies foreign aid promotes economic development and poverty elimination. The government has a responsibility to battle against poverty and its efforts at predictable strategic economic development are significant in poverty reduction by spending the aid money for direct production programs.lationship with GNP per capita while growth of government expenditure has the effect on GNP per capita. The results reveal that there is a positive relationship between economic development, foreign aid and poverty reduction. This implies foreign aid promotes economic development and poverty elimination. The government has a responsibility to battle against poverty and its efforts at predictable strategic economic development are significant in poverty reduction by spending the aid money for direct production programs.