EXTERNAL FINANCIAL INFLOWS AND HUMAN DEVELOPMENT IN NIGERIA
Abstract
This study looked at how money coming into Nigeria from outside affects human development from 1981 to 2023. The researcher collected data on the human development index, which is a way to measure human development, along with foreign direct investment, money sent back by migrants, debt from other countries, and aid from international organisations. The data came from Nigeria's central bank, the United Nations Development Programme, and the World Bank's World Development Indicator. The main method used in the study is the Autoregressive Distributed Lag or ARDL technique. The results of the ARDL Bounds test showed that there is a long-term link between these types of financial inflows and human development. In the long run, foreign direct investment, migrant remittances, and external debt all had a positive but not very strong connection with the human development index. However, official development assistance had a negative and weak connection. In the short run, foreign direct investment, migrant remittances, and external debt had a negative effect on the human development index, while official development assistance had a positive effect. All the financial inflows were statistically significant in the short run, except for external debt. Based on these results, the study suggested that the government should guide foreign direct investment toward sectors that directly improve people’s lives, such as education, health, agriculture, and manufacturing, instead of just focusing on extractive industries like oil. The study also recommended giving support to businesses that rely on a lot of workers, and building better connections between foreign companies and local businesses. The government should also encourage people to save some of the money they receive from migrant remittances instead of just spending it. To do this, they need to make it easier for people to use financial services and save money, and provide education on how to manage money properly. Finally, the government should make sure that external debt is used for projects that will help develop the country and improve people's lives..
JEL: C22, F21, F24, F35, O15, O19
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DOI: http://dx.doi.org/10.46827/ejefr.v10i3.2213
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