External Financial Flows, Fiscal Policy and Human Development Index in Nigeria

Abstract

The sustainable development goals that were rolled out and adjusted from the un-attainment of Millennium development goals of 2015, lacks a notable financial option and channel that would help developing countries like Nigeria to achieve goal 3, goal 4 and goal 8, which this study captured with the human development index. This study examines the effect of external financial flows, fiscal policy and human development index in Nigeria. The used the secondary data that was collected from World development indicators and Central bank of Statistical Bulletin. The period was between 1991 to 2022 bot year inclusive. The external financial flows was captured with foreign direct investment, foreign aid, remittances, net exports, external debt while fiscal policy was captured with government expenditure for education and government expenditure for health. The findings from the external financial flows revealed that foreign direct investment and remittances have a negative significant effect on human development index while net export have a positive significant human development index. The fiscal policy measures revealed that government expenditure on education have a positive significant effect on human development index while government expenditure on health have a negative significant effect on health. The Nigerian government should focus on policies that boost export sectors, especially those that add significant value to raw materials. This can be achieved through subsidies, tax incentives, and investment in infrastructure. The Nigerian government should allocate a larger portion of the national budget to education. This increase in funding should aim to address infrastructural deficits, enhance teacher training, and provide adequate learning materials. Implement robust mechanisms to ensure that health funds are used efficiently and transparently.