FOREIGN FINANCIAL AIDS AND ITS IMPACT ON ECONOMIC GROWTH OF A NATION ( A CASE STUDY OF NIGERIA)

CHAPTER ONE 

INTRODUCTION 

1.1 Background to the Study 

Every nation of the world desired a better economy which also has significant effect on the citizenry and the society at large. The term economic growth is all encompassing and there are factors to be taken into cognizance in order to achieve economic growth (Jhingan, 2011).  Some of these factors include but not limited to the natural resources of a nation,  human capital, business environment to the attraction of Foreign Direct Investment and Foreign Financial Aids which brings us to the topic of this study. 

There have been several debates on whether or not Foreign Financial Aid has significant impact on economic growth of a nation.  According to Abouraia  (2014) Foreign Financial Aid is considered as a solution to the plight of the developing nations by developed nations.  Several developing nations including Nigeria have struggled to attain economy growth since independence with little or no success (Ugwuegbe, Okafor &Akarogbe, 2016).

1.2 Statement of the Problem 

The vast majority of aid effectiveness study results in diverse view with regard to the ability of aid to augment the economic growth of a country and thereby increasing the living condition of the population. Some empirical studies focusing on a cross country studies of the aid-growth phenomenon concluded that there is a negative or no impact of aid on growth (Ranjan & Subramanian, 2008; Boone, 1996; Mosley, et al., 1987). Other studies found that 5 there is a positive relationship between aid and growth (Monoiu & Sanjay, 2009; Clement, et al., 2012; Arndt & Jones, 2015). Although divergent results arise as a result of using different methods, there is uniformity in the literature of using a cross country approach in the study of the aid-growth link.

Most developing nations have continued to experience pervasive poverty situation which  evidently betrays the natural, human resources and high hopes at independence. In addition, corruption, political instability and bad leadership in these developing countries has been a major problem to economic growth (Okoli, &Agu, 2015).  Foreign Financial Aids are majorly grants and loans from developed economies to less of developing economies with the aim of boosting economic activities of the beneficiary countries.  However, with various Foreign Financial Aids received by developing nations like Nigeria, development is yet to be achieved  and it is against this background that this study seeks to investigate foreign financial aids and its impact on economic growth of a nation( A Case Study of Nigeria). 

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