• Taliat Olayinka EMIOLA Department of Economics, Lead City University, Ibadan, Oyo State. Nigeria
Keywords: Domestic Savings, Official Development Assistance, Foreign Direct Investment, Gross Domestic Product, Index for Human Development.


This study examines the interactive effects of domestic savings and foreign capital inflows on economic development in Nigeria. It investigates the dynamic linkage between economic development variables and the interaction of domestic savings and foreign capital inflows into the country. Annual data on savings, investment, export, import, gross domestic product growth rate and other variables for computation of an index for measuring human development in Nigeria between 1981 and 2021 are sourced from the Central Bank of Nigeria statistical bulletin (2022), World Bank Development Indicators (2020) and Human Development Report (2022). Technique of autoregressive distributive lag is used to determine the dynamic relationship among these variables in Nigeria. The results of the interactive models show that official development assistance complements domestic savings to have positive effect on gross domestic product growth rate but foreign direct investment crowds out domestic saving’s positive effect on gross domestic product growth. However, foreign direct investment is found to complement domestic savings in its positive effect on index for human development in Nigeria. The study recommends that more official development assistance and foreign direct investment should be attracted into the country to complement domestic savings in its positive effects on gross domestic product growth rate and index for human development respectively in Nigeria. However, in the case of official development assistance, government should monitor its disbursement. It should not be used for consumption purpose, efforts should be intensified to ensure that corruption and embezzlement are curbed and to ensure its judicious use.


Download data is not yet available.


Adebayo T. S. (2020). The Impact of Capital Inflows on Economic Growth in Nigeria: Empirical Evidence from Wavelet Coherence Technique. Asian Journal of Economics and Empirical Research, 7(2), 136-146.
Akande, E., & Ola-David, O. (2006). The Two-Gap Model of Economic Growth in Nigeria: Vector Autoregression (Var) Approach. Conference Paper Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia.
Anetor F. O. (2018). Economic growth effect of private capital inflows: a structural VAR approach for Nigeria. Journal of Economic Development, 21(1), 18-29.
Angmortey, B., & Tandoh-Offin, P. (2014). Does Foreign Capital Crowd–Out Domestic Saving in Developing Countries? An Empirical Investigation of Ghana. International Journal of Economics and Finance, 6(8).
Balogun T. G., Okafor J., & Ihayere O. B. (2019). “Capital Flows and Economic Growth in Nigeria: An Econometric Approach.” International Journal of Research - Granthaalayah, 7(9), 183-199.
Basnet, H. C. (2013). Foreign Aid, Domestic Savings, And Economic Growth In South Asia. International Business & Economics Research Journal, 12(11).
Burke, P. J., & Ahmadi-Esfahani, F. Z. (2006). Aid and growth: A study of South-East Asia. Journal of Asian Economics, 17, 350-362.
Campbell, O. A., Olurinola, I. O.; Oluwatobi, S., & Emiola, T. O. (2017). Cooperative Societies and Employee’s welfare. International Journal of Economic Research (IJCR), 9(5).
Chigbu E. E., Ubah C. P., & Chigbu U.S. (2015) Impact of Capital Inflows on Economic Growth of Developing Countries. International Journal of Management Science and Business Administration, 1(7), 7-21.
Ebele, E. J., & Iorember, P. T. (2016). Commercial Bank Credit and Manufacturing Sector Output in Nigeria. Journal of Economics and Sustainable Development, 7(16), 189.
Emiola, T. O., & Adeagbo, M. O. (2021). Impact of Bank Density on Domestic Savings in Nigeria. Lead City Journal of Economics (LCJE), 2(1).
Emiola, T. O., & Fagbohun A. C. (2021). Effect of Trade Policy Regime on the Nexus between Foreign Capital Inflows and Economic Growth in Nigeria. Journal of Economic and Allied Research (JEAR), Vol. 6, Issue 4, December.
Gabriel, A. A., Paschal, I. P. O., Chinedu, C. O., & Josaphat, U.J. O. (2020) Impact of Foreign Capital Inflow on Economic Growth in Ecowas Sub-Region, International Journal of Academic Research in Accounting, Finance and Management Sciences, 10(1), 172–188.
Griffin, K. B. (1970). Foreign Capital, Domestic Savings and Economic Development. Oxford Bulletin of Economics and Statistics, 32, 99-112
Igbinedion, S. O., & Olele, E. H. (2018). Foreign Aid-Domestic Savings Nexus: Evidence From Nigeria. Dutse Journal Of Economics And Development Studies (Dujeds), 6(2).
Ikpesu F. (2019). Growth Effects of Capital Inflows and Investment in Nigeria. International Journal of Management, Economics and Social Sciences (IJMESS), 8(1), 5 – 19.
Kapingura F. M. (2018). Relationship between foreign capital flows, domestic investment and savings in the SADC region. Development Southern Africa, 35 (4), 554-568.
Keho Y. (2019). Relationship Between Savings and Economic Growth in Cote d’Ivoire. International Journal of Economics and Financial Issues, 9(6), 202-207
Kohpaiboon, A. (2003). Foreign Trade Regimes and the FDI-Growth Nexus: A Case Study of Thailand. Journal of Development Studies, 40(2), 55-69.
Kolawole, B. O. (2013). Foreign Assistance and Economic Growth in Nigeria: The Two-Gap Model Framework. American International Journal of Contemporary Research 3(10).
Mariana, H., Cristina, C., & Mihaela, I. (2020). The Impact of Interest Rate, Exchange Rate and European Business Climate on Economic Growth in Romania: An ARDL Approach with Structural Breaks. MDPI Sustainability, 12(7), 1-23.
Nagawa, V., Wasswa, F., & Bbaale, E. (2020). Determinants of Gross Domestic Savings in Uganda: An Autoregressive Distributed Lag (ARDL) Approach to Cointegration. Journal of Economic Structures, 9(1).
Nwanne, T. F. I. (2014). Implication of Savings and Investment on Economic Growth in Nigeria. International Journal of Small Business and Entrepreneurship Research, 2(4), 74-86.
Okoro, C. O., Nzotta, S. N., & Alajekwu, U. B. (2019). Effect of International Capital Inflows on Economic Growth of Nigeria. International Journal of Science and Management Studies (IJSMS), 2(2).
Özcan, K. (2019). Foreign Capital Inflows and Domestic Savings in Turkey. In: European Financial Systems. Proceedings of the 16th International Scientific Conference, Brno: Masaryk University, 239-246.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds Testing Approaches to the Analysis of Level Relationship. Journal of Applied Econometrics, 16, 289 – 326.
Saibu, O. (2014). Capital Inflow and Economic Growth Nexus in Nigeria: The Role of Trade Openness. Economica, 10(6).
Serieux, J. (2009). Aid and Savings in Sub-Saharan Africa: Should We Worry About Rising Aid Levels? International Policy Centre For Inclusive Growth (Ipc - Ig), Working Paper Number 50.
Todaro, M. & Smith, S. (2012). Economic Development (11th ed.). New York, NY: Addison-Wesley.
Workneh, M. A. (2013). Impact of foreign aid on domestic saving (case study in Ethiopia). Munich Personal RePEc Archive, MPRA Paper No. 92577.
How to Cite
Olayinka EMIOLA, T. (2023). FINANCE OF ECONOMIC DEVELOPMENT IN NIGERIA: DOES FOREIGN CAPITAL INFLOWS COMPLEMENT DOMESTIC SAVINGS?. GPH-International Journal of Social Science and Humanities Research, 6(09), 85-104.