Economic Development Implications Of The International Financial Institutions Loans: A Focus On Employment Generation In Nigeria.
EWUBARE Dennis Brown
Department of Economics, Faculty of Social Science, Rivers State University, Port Harcourt, Rivers State Nigeria
BOZI Rosemary Chioma
Department of Economics, Faculty of Social Science, Rivers State University, Port Harcourt, Rivers State Nigeria
Keywords: Employment generation, , institutions loans, , International Finance Corporation, IDA, Paris Club and African Development Bank
Abstract
Employment generation has remained central to the policy goal of economic development in Nigeria. In view of this, an empirical investigation into the link between international financial institutions loans and employment rate was carried out in this study. Specifically, the effects of loans from the International Finance Corporation (IFC), International Development Association (IDA), Paris Club and African Development Bank on employment rate were examined. The data for the variables were obtained from the United Nations Development Programme Human Development Report, National Bureau of Statistics, World Development Indicators and International Debt Statistics. The empirical investigation followed an ex post facto research design with the application of descriptive statistics, unit root and cointegration tests as well as error correction model and Granger causality tests as the data analysis techniques. The unit root test results revealed that all the variables are stationary at first difference, which justifies the test for cointegration using the Johansen method. It was found from the cointegration test results that long run relationship exists among the variables in the model. The parsimonious ECM revealed that IDA and African Development Bank loans have a significant positive effect on employment rate. This highlights the substantial role played these funding sources in generating employment in Nigeria. On the contrary, International Finance Corporation and Paris Club do not have any significant effect on employment rate. Owing to the findings, it is recommended that loans available to Nigeria from the international development association should be channeled to investments in critical infrastructure and agriculture development to generate employment and achieve economic development.