ABSTRACT

This paper investigated the impact of foreign aid on economic growth in Nigeria for the period of 1981-2015. The data was collected from secondary sources from CBN statistical bulletin and World Bank report. To carry out this work, the study employed the Ordinary Least Square (OLS) estimation technique. To test for the properties of time series, the Augmented Dickey-Fuller (ADF) test was used to determine the stationarity of the variables and Johansen Cointegration test was employed to test for the long-run relationship of the variables. It was discovered that that there is no long-run relationship between the variables in the series. The empirical findings was apparent from the result of the regression analysis that foreign aid has a positive effect on GDP Per Capita which this study adopted as a proxy for economic growth in Nigeria but was statistically insignificant. However, Foreign Direct Investment (FDI) has a positive and significant effect on economic growth in Nigeria. This finding is also in tandem with that of Bakare (2011). The government should therefore, design appropriate and stable policies that would ensure more benefits from foreign aid which will enhance economic growth in Nigeria.