Developing economies have often relied on developmental finance (aid) in improving the welfare and social being of their citizenry. However, the developmental effect of aid on developing economies has sparked a lot of interest among scholars and policymakers. The objective of the study is to examine the welfare effect of aid in Nigeria for the period of 1981 to 2017. The study employed the autoregressive distributed lag (ARDL) approach in analysing the data. The study confirmed that in the short-run and long-run, aid positively influences welfare. Based on the findings from the study, the government should design and implement policies that will encourage the inflow of aid to spur growth and increase welfare in the country. More so, the government should ensure that the inflow of aid is judiciously used to ensure continuous improvement of citizen welfare in the country.
Key words: Aid, welfare, autoregressive distributed lag (ARDL).
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