International Development Agencies and Per Capital Gross Domestic Product in Nigeria

Abstract

This study provides econometrics evidence on the role of international development agencies in boosting per capita gross domestic product in Nigeria. The agencies covered include the United States Agency for International Development, International Fund for Agriculture Development and Department for International Development. In addition to these agencies, official development assistance (ODA) from Development Assistance Committee (DAC) was introduced in the model as part of the exogenous variables. The data required were sourced from World Development Indicators and analyzed with a combination of cointegrating regression model and error correction mechanism (ECM). It was observed from the cointegration test results that the variables are cointegrated. The cointegrating regression estimates indicate that development assistance from Department for International Development has significant positive relationship with per capita GDP. 1 percent increase in development financing from DFID increases per capita GDP by 0.268 percent. On the contrary, funds from United Sates Agency for International Development impact negatively on per capita GDP in the long run. More so, the parsimonious ECM reveals that financial support from International Fund for Agriculture Development is positive linked to per capita GDP growth in the short run. The error correction estimate (-0.3617) suggests that short run deviations in the model are corrected at a speed of 36 percent. Based on the findings, it is recommended that policy makers should prioritize key sectors with high potentials of inclusive growth in the allocation of development assistance from international development agencies in order to ensure the participation of the population in the share of the growth process.