Asian Journal of Economics, Finance and Management

This paper utilized time series data from the most populace country in the black race, two measures of human development (education and health) and foreign aid were considered, and a dynamic ordinary least square (i.e., dynamic and fully modified ordinary least squares) and vector autoregressive model estimators were engaged to analyzed the data for the 1980-2019 to investigates the effect of foreign aid on education and health outcomes in Nigeria.  Specifically, we examined whether foreign aid targeted to education or the health sector increases primary school enrollment and completion rates and whether foreign aid to the health sector increases the life expectancy rates. Our findings revealed that foreign aid has significant positive impact on primary school enrollment and completion rates. Similarly, foreign aid to the health sector significantly exerts positive impact on life expectancy rate in Nigeria even though the effect of foreign aid on primary education and health sectors may be different on disaggregate approach from the aggregate approach outcomes in these sectors. We have also found no evidence of fungibility of foreign aid to primary education and health sectors in our utilized sample.