Dynamic Aid-Growth Relationship in Nigeria: A Two-Gap Approach

Yıl 2020, Cilt: 11 Sayı: 1, 1 - 17, 30.06.2020

Tomiwa Adebayo Abraham Awosusı Tolulope Ajayı

Öz

This study aims to critically analyze the dynamic aid-growth interaction in Nigeria by revisiting the two-gap framework. The study utilized various unit root tests to verify the integration order of indicators utilized. The variables are integrated at a mixed level i.e. 1(0) and 1(1) thus, ARDL techniques were utilized to investigate the short and long-run interactions. Furthermore, a robustness check was carried out by utilizing FMOLS and DOLS. Findings of the FMOLS, and DOLS comply with the ARDL estimate. In the long run; (i) foreign aid, gross domestic saving and gross capital formation have positive and significant relationship with GDP growth while trade has an insignificant association with GDP growth; (ii) In the short run, all the independent variables have positive and significant link with GDP growth with the exemption of trade; (iii) the FMOLS and DOLS affirms the findings of the ARDL long-run estimate; and (iv) since trade has an insignificant relationship with GDP growth, this study refute the two-gap theory in the case of Nigeria. Recommendations are put forward based on the findings.

Anahtar Kelimeler

aid, growth, ARDL

Kaynakça

• Abdu, M. (2015), “Impact of Saving, Foreign Aid on Growth in India (1981-2011): A Perspective on Dual Gap Model”, In Proceedings of the International Symposium on Emerging Trends in Social Science Research, 3-5.
• Aghoutane, K., & Karim, M. (2017), “The Impact of Foreign Aid on Economic Growth in Morocco: Econometric Analysis Using VECM”, International Journal of Economics and Finance, 9(5): 87-93.
• Al Foul, B. M. A. (2013), “Foreign Aid and Economic Growth in Egypt and Jordan: An Empirical Analysis”, The Global Journal of Finance and Economics, 10(2): 225-231. Ali, S., & Ahmad, N. (2013), “A Time-Series Analysis of Foreign Aid and Income Inequality in Pakistan”, Global Journal of Management and Business Research, 13(5): 11-20.
• Chenery, H. B & Strout, A. M. (1966), “Foreign Assistance and Economic Development”, The American Review, 56(4): 679-733.
• Chenery, H. B. (1967), “Foreign Assistance and Economic Development” In Capital Movements and Economic Development, Palgrave Macmillan, London, 268-292.
• Dickey, D. A., & Fuller, W. A. (1979), “Distribution of The Estimators for Autoregressive Time Series With a Unit Root”, Journal of the American Statistical Association, 74(366a): 427-431.
• Dimanche, K. S. (2010), “Foreign Aid and Economic Growth”, Doctoral Dissertation, Florida Atlantic University, Honors College.
• Engle, R.F., and C.W. Granger. (1987), “Co-integration and Error Correction: Representation, Estimation, and Testing”, Econometrical: Journal of the Econometric Society, 55(2): 251–276.
• Fashina, O. A., Asaleye, A. J., Ogunjobi, J. O., & Lawal, A. I. (2018), “Foreign Aid, Human Capital and Economic Growth Nexus: Evidence From Nigeria”, Journal of International Studies, 11(2): 104-117.
• Girma, H. (2015), “The Impact of Foreign Aid on Economic Growth: Empirical Evidence From Ethiopia (1974-2011) Using ARDL Approach”, Journal of Research in Economics and International Finance, 4(1): 1-12.
• Harrod, R. F. (1939), “An Essay in Dynamic Economics”, Economic Journal, 49: 14-33.
• Hotouom, L. M. (2015), “The Effect of Foreign Aid on Economic Growth in Tanzani”, https://www.researchgate.net/publication/283644604_The_Effect_of_foreign_aid_on_ economic_growth_in_Tanzania, Retreived: 21.01.2020.
• Hossain, M. S., & Mitra, R. (2013), “The Determinants of Economic Growth in Africa: A Dynamic Causality and Panel Cointegration Analysis”, Economic Analysis and Policy, 43(2): 217.
• Kabete, C. N. (2008), “Foreign Aid and Economic Growth: The Case of Tanzania”. Institutes of Social Studies (ISS), Netherlands.
• Kargbo, P. (2012), “Impact of Foreign Aid on Economic Growth in Sierra Leone: Empirical Analysis”, United Nations University, Working Paper No. 2012/07.
• Kolawole, B. O. (2013), “Foreign Assistance and Economic Growth in Nigeria: The Two-Gap Model Framework”, American International Journal of Contemporary Research, 3(10): 153-160.
• Kwiatkowski, D., Phillips, P. C. B., Schmidt, P., Shin, Y. (1992), “Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root”, Journal of Econometrics, 54(1-3): 159-178.M
• Masih, A. M., & Masih, R. (1996), “Energy Consumption, Real Income and Temporal Causality: Results From a Multi-Country Study Based on Cointegration and Error-Correction Modelling Techniques”, Energy Economics, 18(3): 165-183.
• Mbah, S., & Amassoma, D. (2014), “The Linkage Between Foreign Aid and Economic Growth in Nigeria”, International Journal of Economic Practices and Theories, 4: 1007-1017.
• Minoiu, C., & Reddy, S. (2009), “Development Aid and Economic Growth: A Positive Long-Run Relation”, Quarterly Review of Economics and Finance, 50(2): 27-39.
• Mohapatra, G., Giri, A. K., & Sehrawat, M. (2016), “Foreign Aid, Macroeconomic Policies and Economic Growth Nexus in India: An ARDL Bounds Testing Approach”, Theoretical & Applied Economics, 23(4): 183-202.
• Ojiambo, E., Oduor, J., Mburu, T., & Wawire, N. H. (2015), “Aid Unpredictability and Economic Growth in Kenya”, African Development Bank, Working Paper Series No. 226.
• Onyibor, K., Bah, S. I., & Tomiwa, A. (2018), “Aid-Growth Relationship: Evidence from a Cointegratıon Analysis for the Five Poorest Countries of the World”, LAÜ Sosyal Bilimler Dergisi, 9(2): 121-137.