Eco. 361 Assignment (Finance and Development)—- 14/7/2018

CHUKWUMALUME NAOMI CHINAZA 2015/204083 ECONOMICS

REFERENCES
Andrianova, S., Demetriades, P. and Xu, C. (2008) “Political Economy Origins of Financial Development in Europe and Asia”, World Economy and Finance WorkingPaper WEF0034
Caporale, G.M., Rault, C., Sova, R., Sova, A. (2009), Financial Development and Economic Growth: Evidence from Ten New EU Members. Discussion Papers (940), 1-43. Berlin, October, 2009.
Haber, S., (forthcoming), Why Institutions Matter: Banking and Economic Growth in Mexico, 1821-2004”, in Welna, C. (ed.) Reforming the State of Mexico, University of Notre Dame Press, forthcoming.
Investopedia Inc. (2017) What is Finance https://www.investopedia.com/ask/answers/what-is- finance/#ixzz5KvrkDa3
Sociology Discussion (2017) Development: meaning and concept of development http://www.sociologydiscussion.com/society/development-meaning-and-concept-of- development/688
Springer Inc (2018) Relationship between Financial Development and Economic Growth in Nigeria: https://link.springer.com/chapter/10.1007/978-3-642-27711-5_15
Wikipedia Inc. (2018) Non-governmental Organization https://en.wikipedia.org/wiki/Non- governmental_organization

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The crisis has challenged conventional thinking in financial sector policies and sparked debate on how best to achieve sustainable development. To effectively reassess and re-implement financial policies, publications such as Global Financial Development Report (GFDR) by the World Bank and Global Financial Stability Report (GFSR) by the IMF can play an important role.
The Global Financial Development Report, a new initiative by the World Bank, highlights issues that have come to the forefront after the crisis and presents policy recommendation to strengthen systems and avoid similar crisis in the future. By gathering data and knowledge on financial development around the world, the GFDR report aims to put into spotlight issues of financial development and hopes to present analysis and expert views on current policy issues.
In Malaysia, the Asian Institute of Finance was established by Bank Negara Malaysia and Securities Commission Malaysia to develop human capital in the financial services industry.
Theories of Financial Sector Development
Acemoglu, Johnson and Robinson emphasize the importance of the distribution of political power in shaping the differing paths of financial sector development in the United States and Mexico in the 19th and early 20th century.They note that in the United States banking and financial services grew rapidly because American politicians did not have the power to create monopolies in the banking sector that they could appropriate rents from. The federal nature of the US political system meant that states ended up competing with each other to attract inward investment. This in turn, made the restriction of competition in the banking sector untenable. In Mexico, on the other hand, power was centralized in the hands of PorfirioDíaz, the dictator who came to power in 1910. Suffrage was highly restricted and there were no competing federal states which meant that political power was not widely spread. As a result, "the central government granted monopoly rights to banks" which enabled them to "raise revenue and redistribute rents to political supporters."Only businesses with close personal connections to the banks and the politicians were able to gain access to finance which hindered the development of arms length finance.
Rajan and Zingales focus on the power of interest groups to explain cross-sectional and time-series variation in financial sector development.They argue that incumbents in industry and the financial sector have an incentive to oppose the availability of arms-length finance and greater competition in the financial sector because that would lower their market share and profit margins. Cross border capital flows limit the government's ability to direct credit and give out subsidies to these firms is restricted. The arrival of new foreign firms will cause banks to push for improved disclosure standards and contract enforcement because they would not have personal connections with foreign firms. Incumbent firms will be unable to rely on connections in the banking sector to provide them with loans and will therefore push for more competition and lower barriers to entry in the financial sector so their access to finance improves. In this model, increased trade and capital flows are an exogenous shock that can change the incentives of the economic elite. They now have an incentive to level the playing field and ensure that everyone plays by the same set of rules.

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government, information about the lives, capabilities, attitudes and cultural characteristics of people at the local level.
NGOs can facilitate communication upward from people to the government and downward from the government to the people. Communication upward involves informing government about what local people are thinking, doing and feeling while communication downward involves informing local people about what the government is planning and doing. NGOs are also in a unique position to share information horizontally, networking between other organizations doing similar work.
4.Technical Assistance and Training: Training institutions and NGOs can develop a technical assistance and training capacity and use this to assist both CBOs and governments.
5.Research, Monitoring and Evaluation: Innovative activities need to be carefully documented and shared – effective participatory monitoring would permit the sharing of results with the people themselves as well as with the project staff.
6.Advocacy for and with the Poor: In some cases, NGOs become spokespersons or ombudsmen for the poor and attempt to influence government policies and programs on their behalf. This may be done through a variety of means ranging from demonstration and pilot projects to participation in public forums and the formulation of government policy and plans, to publicizing research results and case studies of the poor. Thus NGOs play roles from advocates for the poor to implementers of government programs; from agitators and critics to partners and advisors; from sponsors of pilot projects to mediators.

Other financial aspects for finance and development
Financial sector development
Financial sector development in developing countries and emerging markets is part of the private sector development strategy to stimulate economic growth and reduce poverty. The Financial sector is the set of institutions, instruments, and markets. It also includes the legal and regulatory framework that permit transactions to be made through the extension of credit.[1] Fundamentally, financial sector development concerns overcoming “costs” incurred in the financial system. This process of reducing costs of acquiring information, enforcing contracts, and executing transactions results in the emergence of financial contracts, intermediaries, and markets. Different types and combinations of information, transaction, and enforcement costs in conjunction with different regulatory, legal and tax systems have motivated distinct forms of contracts, intermediaries and markets across countries in different times.

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Concepts of non-governmental organization and their impact on development
Non-governmental organizations, commonly referred to as NGOs,are usually non-profit and sometimes international organizations independent of governments and international governmental organizations (though often funded by governments)that are active in humanitarian, educational, health care, public policy, social, human rights, environmental, and other areas to effect changes according to their objectives. They are thus a subgroup of all organizations founded by citizens, which include clubs and other associations that provide services, benefits, and premises only to members. Sometimes the term is used as a synonym of "civil society organization" to refer to any association founded by citizens,[11] but this is not how the term is normally used in the media or everyday language, as recorded by major dictionaries. The explanation of the term by NGO.org (the non-governmental organizations associated with the United Nations) is ambivalent.

HISTORY OF NGOs
International non-governmental organizations have a history dating back to at least the late eighteenth century. It has been estimated that by 1914, there were 1083 NGOs. International NGOs were important in the anti-slavery movement and the movement for women's suffrage, and reached a peak at the time of the World Disarmament Conference. However, the phrase "non-governmental organization" only came into popular use with the establishment of the United Nations Organization in 1945 role for organizations which are neither governments nor member states—see Consultative Status. The definition of "international NGO" (INGO) is first given in resolution 288 (X) of ECOSOC on February 27, 1950: it is defined as "any international organization that is not founded by an international treaty". The vital role of NGOs and other "major groups" in sustainable development was recognized in Chapter 27 of Agenda 21, leading to intense arrangements for a consultative relationship between the United Nations and non-governmental organizations. It has been observed that the number of INGO founded or dissolved matches the general "state of the world", rising in periods of growth and declining in periods of crisis.
Rapid development of the non-governmental sector occurred in western countries as a result of the processes of restructuring of the welfare state. Further globalization of that process occurred after the fall of the communist system and was an important part of the Washington consensus.
FUNDS FOR NGOs
NGOs are usually funded by donations, but some avoid formal funding altogether and are run primarily by volunteers. NGOs are highly diverse groups of

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investment, including venture capital, and footloose portfolio investment, but the risks associated with globally mobile capital are pointed out, as well as possible mitigating policies, particularly in light of recent evidence from the Asian crisis.
10. The Conference may wish to reflect on the fact that notwithstanding the notable efforts made by many African countries to implement economic and financial reforms, FDI flows to most of them remain marginal. The Conference may further wish to discuss and share experiences of implementing FDI-friendly policies and the different outcomes in various countries. The Conference may also wish to reflect on the role of the International Finance Corporation (IFC) in catalyzing private sector investment and the effectiveness of the Multilateral Investment Guarantee Agency (MIGA) in offsetting the non-commercial risks perceived by potential investors in Africa. How can these agencies’ work be made more effective in the task of financing Africa’s development?
11. Capital flight and its impact on development: While striving to attract foreign savings for development, Africa has a larger proportion of wealth held overseas by residents than any other continent (39 per cent compared with 6 per cent for East Asia before the crisis). Stemming and reversing capital flight could go a long way to solving Africa’s development finance problem. Section V discusses the negative financial outflows due to capital flight from Africa; the policy lapses likely to trigger or contribute to capital flight; and the measures required for stemming and reversing this phenomenon. The paper notes that adverse investor risk ratings, unsustainably high external debts and macroeconomic policy errors — or fear of their possible occurrence — are root causes of flight capital. Policy errors that cause inflation, exchange rate misalignment and high fiscal deficits choke off opportunities for profitable investments. Inconsistent and unsustainable sets of policies can also trigger capital flight even when, in the very short run, everything looks just fine. The absence or weakness of capital markets contributes to the problem. Capital markets spread risks among investors and can create investment opportunities for the non-professional and typically small investor. Additionally, large amounts of corruptly obtained funds, particularly by public officials, are more likely to be stashed away overseas than invested in their country of origin. Corruption raises transaction costs and its unpredictability makes returns on investment uncertain, which discourages private investment. Corruption must be fought using political, administrative and economic policy instruments.
12. The Conference may wish to consider and discuss measures and policies that can improve the investment climate in African countries in order to stem the flow of resources out of the continent, focussing on policies for creating and sustaining a consistent and stable macroeconomic environment and promoting capital markets. It may further wish to discuss experiences with respect to the impact of simpler classification and administrative procedures in key areas — such as taxation, export and import licensing — on corruption by officials, and the impact of eliminating market distortions on discretionary powers of government officials and corruption. Some changes in the banking

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2. Considering the strong effort, which led to the good recent performance, the paper notes that attaining and sustaining the GDP growth rates indicated above in terms of resources and policy reforms, is a monumental task. The paper then focuses on reviewing developments and the mix of actions necessary to enhance development financing–focusing on measures to increase the impact of ODA, attract private capital, stem capital flight, raise domestic income. Financial flows to Africa is discussed to raisepolicymakers’ awareness of important lessons to be learnt from the experience and the issues central to the debate on the possible reform of the protocols and institutions regulating international financial flows. The whole discussion is cast in the context of Africa’s transition from public sector-led development to a private sector-driven partnership, where the public sector enables and supports an environment conducive to non-speculative private investment.
3. The discussion is intended to guide and inform the dialogue at the Joint Conference of the Ministers of Finance and the Ministers of Economic and Social Development and Planning, without necessarily attempting to be comprehensive or exhaustive. But it is expected to contribute to clarifying options in key areas of country policy, and to lead to collective regional and subregional follow-up plans towards agreed objectives in a sub-set of the issues discussed. In particular, a common regional approach is needed for fostering African ownership of the development agenda and the process for building consensus towards that agenda — so as to better focus ODA, and for engaging actively in the process of resolving the debt problem. Similarly, common steps are needed in sensitizing the proposals for reform of the international financial system to the special needs of development financing, and in supporting a subregional approach to capital markets development, in view of its importance for development financing. A similar approach is needed to build the capacity in Africa to participate in the new data and financial reporting and information dissemination systems, which have been designed by the IMF in the wake of the Asian crisis. They are important disclosure processes that are likely to influence investor location decisions. Currently, only South Africa participates in these reporting processes.
4. The rest of this Section I of the paper summarizes the main conclusions and key policy issues for debate and for information and experience sharing. It is organized in seven sections, which relate to the sub-themes of the Conference and the structure of Sections III through VIII of the paper.
5. Prospects and outlook for official development assistance to Africa: The ODA component of development finance is discussed in Section III. The conclusion is reached that large increases in ODA are unlikely, even as the prospects for aid effectiveness in Africa are improving. Yet the contribution from official development assistance is important in terms of strengthening governments' ability to make long-term investments that are vital for private sector-led economic growth. Effective aid enables key public investment programmes in infrastructure and human resources to be carried out in a non-inflationary manner, which lowers operational costs and improves the efficiency of private investment. Studies have shown that in reforming countries, one dollar of aid attracts $1.80 of private investment. Aid is playing a critical and, for now perhaps, irreplaceable role in closing the gaps in financial markets that inhibit investment through its coverage of marginal risks and stretching out maturities. This helps attract billions of dollars of private investment in infrastructure and other forms of direct foreign investment, particularly large-scale, that otherwise would not take place. Aid is most effective in a good macroeconomic policy environment, and is ineffective or even harmful in poor policy environments.

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either no effect or, at best, a mixed effect. Thus, an objective reading of the results of the vast research effort undertaken to date suggests that there is no strong, robust, and uniform support for the theoretical argument that financial globalization per se delivers a higher rate of economic growth. Perhaps this is not surprising. As noted by several authors, most of the cross-country differences in per capita incomes stem not from differences in the capital-labor ratio but from differences in total factor productivity, which could be explained by "soft" factors such as governance and the rule of law. In this case, although embracing financial globalization may result in higher capital inflows, it is unlikely, by itself, to cause faster growth. In addition, as is discussed more extensively later in this paper, some of the countries with capital account liberalization have experienced output collapses related to costly banking or currency crises. An alternative possibility, as noted earlier, is that financial globalization fosters better institutions and domestic policies but that these indirect channels can not be captured in standard regression frameworks. In short, although financial globalization can, in theory, help to promote economic growth through various channels, there is as yet no robust empirical evidence that this causal relationship is quantitatively very important. This points to an interesting contrast between financial openness and trade openness, since an overwhelming majority of research papers have found that the latter has had a positive effect on economic growth.
What Is the Impact of Financial Globalization on Macroeconomic Volatility?
In theory, financial globalization can help developing countries to better manage output and consumption volatility. Indeed, a variety of theories imply that the volatility of consumption relative to that of output should decrease as the degree of financial integration increases; the essence of global financial diversification is that a country is able to shift some of its income risk to world markets. Since most developing countries are rather specialized in their output and factor endowment structures, they can, in theory, obtain even bigger gains than developed countries through international consumption risk sharing—that is, by effectively selling off a stake in their domestic output in return for a stake in global output.
How much of the potential benefits, in terms of better management of consumption volatility, has actually been realized? This question is particularly relevant in terms of understanding whether, despite the output volatility experienced by developing countries that have undergone financial crises, financial integration has protected them from consumption volatility. New research presented in this paper paints a troubling picture. Specifically, although the volatility of output growth has, on average, declined in the 1990s relative to the three preceding decades, the volatility of consumption growth relative to that of income growth has, on average, increased for the emerging market economies in the 1990s, which was precisely the period of a rapid increase in financial globalization. In other words, as is argued in more detail later in the paper, procyclical access to international capital markets appears to have had a perverse effect on the relative volatility of consumption for financially integrated developing economies.

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A growing body of evidence suggests that it has a quantitatively important impact on a country's ability to attract foreign direct investment and on its vulnerability to crises. Although different measures of institutional quality are no doubt correlated, there is accumulating evidence of the benefits of robust legal and supervisory frameworks, low levels of corruption, a high degree of transparency, and good corporate governance. A review of the available evidence does not, however, provide a clear road map for countries that have either started on or desire to start on the path to financial integration. For instance, there is an unresolved tension between having good institutions in place before capital market liberalization and the notion that such liberalization in itself can help a country import best practices and provide an impetus to improve domestic institutions. Furthermore, neither theory nor empirical evidence has provided clear-cut general answers to related issues, such as the desirability and efficacy of selective capital controls. Ultimately, these questions can be addressed only in the context of country-specific circumstances and institutional features. The remainder of this section provides an overview of the structure of this paper. Section II documents some salient features of global financial integration from the perspective of developing countries. Sections III and IV analyze the evidence on the effects of financial globalization on growth and volatility, respectively, in developing countries. Section V discusses the relationship between the quality of institutions and the benefit-risk trade-off involved in undertaking financial integration.
Definitions and Basic Stylized Facts
Financial globalization and financial integration are, in principle, different concepts. Financial globalization is an aggregate concept that refers to increasing global linkages created through cross-border financial flows. Financial integration refers to an individual country's linkages to international capital markets. Clearly, these concepts are closely related. For instance, increasing financial globalization is perforce associated with increasing financial integration on average. In this paper, therefore, the two terms are used interchangeably. Of more relevance for the purposes of this paper is the distinction between de jure financial integration, which is associated with policies on capital account liberalization, and actual capital flows. For example, indicator measures of the extent of government restrictions on capital flows across national borders have been used extensively in the literature. On the one hand, using this measure, many countries in Latin America would be considered closed to financial flows. On the other hand, the volume of capital actually crossing the borders of these countries has been large relative to the average volume of such flows for all developing countries. Therefore, on a de facto basis, these Latin American countries are quite open to global financial flows. By contrast, some countries in

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REFERENCES

http://www.brooklings.edu/blog/education-plus-development/2014/02/20/seven-facts-about-global-education-financing/
http://www.ecdpm.org/talking-points/5-key-facts-financing-development/
http://www.worldbank.org/en/publication/gfdr/gfdr-2016
http://www.oecd.org/development
http://www.federalreserve.gov/newsevents/speech/mishkin20070426ahtm
Asogwa R.C (2005), “Asssessing the Benefits and Costs of Financial Sector
Reforms in Nigeria”: An Event Study Analysis. Being a paper
submitted for presentation at 46th annual Conference of the Nigerian
Economic Society.(NES) Lagos.
Central Bank of Nigeria Bullion Varoius Issues.
Dawood M. (2004) Financial Sector Reforms in Pakistan and a test of
McKinnon and Shaw’s Transmission Mechanism. “Lesson from the
last Decade”.Working Paper Series No. 397. Institute o Social
Studis. The Hague.
De Gregorio J. and Guidotti P. (1995) Financial Development and Economic
Growth in World Development 23, 3, Pp433-448
Demetriades P. and Hussein K. (1996) ‘Does Financial Development cause
Economic Growth? Time series Evidence from 16
Demirguc-Kunt, A., and.Levine R.(1996), “ Stock Market, Corporate Finance
and Economic Growth: An overview “in World Bank Economic
Review 10; 2, Pp223-39.
Gibson H. and Tsakalotos E.(1994) The scope and limit of financial
liberalization in Developing countries: An empirical analysis,
Journal of Development Studies, 30(3):578-628
Keynes, J, M (1936) The General Theory of Employment Interest, and
Money. London: Macmillan
Levine, R. and Zervos R. (1998), Stock Markets, Banks, and Economic
Growth,American Economic Review, 88(3), pp. 537-58.

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Additionally, it reduces poverty and inequality by enabling and broadening access for the poor and vulnerable groups, facilitating risk management by reducing their vulnerability to shocks, and raising investment and productivity that generates higher income.
Financial sector development also assists the growth of small and medium-sized enterprises (SMEs) by giving them with access to finance. SMEs are typically labor-intensive and create more jobs than large firms, which contributes significantly to economic development in emerging economies.
Additionally, financial sector development also entails establishing robust financial policies and regulatory framework. The absence of adequate financial sector policies could have disastrous outcome, as illustrated by the global financial crisis. Financial sector development has heavy implication on economic development‐‐both when it functions and malfunctions.
The crisis has challenged conventional thinking in financial sector policies and sparked debate on how best to achieve sustainable development. To effectively reassess and re-implement financial policies, publications such as Global Financial Development Report (GFDR) by the World Bank and Global Financial Stability Report (GFSR) by the IMF can play an important role.
The Global Financial Development Report, a new initiative by the World Bank, highlights issues that have come to the forefront after the crisis and presents policy recommendation to strengthen systems and avoid similar crisis in the future. By gathering data and knowledge on financial development around the world, the GFDR report aims to put into spotlight issues of financial development and hopes to present analysis and expert views on current policy issues.
In Malaysia, the Asian Institute of Finance was established by Bank Negara Malaysia and Securities Commission Malaysia to develop human capital in the financial services industry.
Theories of Financial Sector Development
Acemoglu, Johnson and Robinson emphasize the importance of the distribution of political power in shaping the differing paths of financial sector development in the United States and Mexico in the 19th and early 20th century.They note that in the United States banking and financial services grew rapidly because American politicians did not have the power to create monopolies in the banking sector that they could appropriate rents from. The federal nature of the US political system meant that states ended up competing with each other to attract inward investment. This in turn, made the restriction of competition in the banking sector untenable. In Mexico, on the other hand, power was centralized in the hands of PorfirioDíaz, the dictator who came to power in 1910. Suffrage was highly restricted and there were no competing federal states which meant that political power was not widely spread. As a result, "the central government granted monopoly rights to banks" which enabled them to "raise revenue and redistribute rents to political supporters."Only businesses with close personal connections to the banks and the politicians were able to gain access to finance which hindered the development of arms length finance.

MUOJIUBA GENEVIEVE ADAOBI 2015/200431 ECONOMICS
1.Development and Operation of Infrastructure: Community-based organizations and cooperatives can acquire, subdivide and develop land, construct housing, provide infrastructure and operate and maintain infrastructure such as wells or public toilets and solid waste collection services. They can also develop building material supply centers and other community-based economic enterprises. In many cases, they will need technical assistance or advice from governmental agencies or higher-level NGOs.
2.Supporting Innovation, Demonstration and Pilot Projects: NGO have the advantage of selecting particular places for innovative projects and specify in advance the length of time which they will be supporting the project – overcoming some of the shortcomings that governments face in this respect. NGOs can also be pilots for larger government projects by virtue of their ability to act more quickly than the government bureaucracy.
3.Facilitating Communication: NGOs use interpersonal methods of communication, and study the right entry points whereby they gain the trust of the community they seek to benefit. They would also have a good idea of the feasibility of the projects they take up. The significance of this role to the government is that NGOs can communicate to the policy-making levels of government, information about the lives, capabilities, attitudes and cultural characteristics of people at the local level.
NGOs can facilitate communication upward from people to the government and downward from the government to the people. Communication upward involves informing government about what local people are thinking, doing and feeling while communication downward involves informing local people about what the government is planning and doing. NGOs are also in a unique position to share information horizontally, networking between other organizations doing similar work.
4.Technical Assistance and Training: Training institutions and NGOs can develop a technical assistance and training capacity and use this to assist both CBOs and governments.
5.Research, Monitoring and Evaluation: Innovative activities need to be carefully documented and shared – effective participatory monitoring would permit the sharing of results with the people themselves as well as with the project staff.
6.Advocacy for and with the Poor: In some cases, NGOs become spokespersons or ombudsmen for the poor and attempt to influence government policies and programs on their behalf. This may be done through a variety of means ranging from demonstration and pilot projects to participation in public forums and the formulation of government policy and plans, to publicizing research results and case studies of the poor. Thus NGOs play roles from advocates for the poor to implementers of government programs; from agitators and critics to partners and advisors; from sponsors of pilot projects to mediators.

MUOJIUBA GENEVIEVE ADAOBI 2015/200431 ECONOMICS
14. The Conference may wish to discuss ways of raising private savings, including strengthening and improving reliability of thrift institutions and incentives to save, as well as the need for broadening the range of flexible financial savings instruments. Ministers at the Conference may also wish to review and share experiences with tax reforms in their countries and associated problems, and discuss burden-sharing arrangements in the provision of public goods and services, as well as measures they have implemented to raise the effectiveness of government expenditure.
15. The development of capital markets has emerged as important in raising the level of domestic savings, and as critical to attracting foreign private investment, stemming and reversing capital flight. In 1996, ECA organized in Accra, Ghana, a major conference on "Reviving Private Sector Partnerships for Growth and Investment," out of which the African Capital Markets Forum was born. Its functions are to serve as a clearing-house for the exchange of views and to provide training and other services needed to build and strengthen the capacity of capital markets in Africa. Because of the limitations of small nation-states – from economic and financial points of view – and the advantages to be gained from operations in the context of larger financial markets, a subregional approach to capital market development, including the provision of support services, is very appealing. Ministers may wish to discuss practical steps for a subregional approach to capital market development. How can the African Capital Markets Forum be further supported and rendered more effective in its functions
Concepts of non-governmental organization and their impact on development

Non-governmental organizations, commonly referred to as NGOs,are usually non-profit and sometimes international organizations independent of governments and international governmental organizations (though often funded by governments)that are active in humanitarian, educational, health care, public policy, social, human rights, environmental, and other areas to effect changes according to their objectives. They are thus a subgroup of all organizations founded by citizens, which include clubs and other associations that provide services, benefits, and premises only to members. Sometimes the term is used as a synonym of "civil society organization" to refer to any association founded by citizens,[11] but this is not how the term is normally used in the media or everyday language, as recorded by major dictionaries. The explanation of the term by NGO.org (the non-governmental organizations associated with the United Nations) is ambivalent.

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8. The Conference may wish to focus on issues of improving the efficiency and impact of public expenditures financed with foreign aid resources and "optimizing" aid’s share in development expenditures, so as to reduce aid dependency in the long run. The Conference may also wish to deliberate on the substance and prospects for new aid modalities, which emphasize a holistic and comprehensive approach, as elaborated particularly in the OECD-DAC, World Bank and SPA proposals. Ministers may wish to share views on how best to foster a new donor-beneficiary relationship in which multi-donor programmes focus on supporting an Africa-driven agenda. With the support of the African Development Bank (ADB) and the Organization of African Unity (OAU), ECA has launched the African Development Forum (ADF) with that objective in mind. Its first meeting will take place in October 1999 on the theme: "The Challenge to Africa of Globalization and the Information Age. How can the ADF process best reinforce the objectives of the proposed new aid modalities?"
9. Other sources of external finance: Non-official sources of external finance (private capital inflows) are discussed in Section IV. Noting that Africa has not benefited from the phenomenal growth in foreign investment, compared say to East Asia, the paper lays out some key conditions and policy challenges to attract foreign investment. Among them are supportive macroeconomic policy and legal and regulatory frameworks; the rule of law and the enforcement of contracts; functioning social and economic infrastructure, financial sector reforms, support for capital markets development; deliberate and explicit attention to the concerns of investor risk rating agencies, etc. Privatization as an instrument for attracting foreign capital is discussed, along with its possible downside — the political risk associated with the declining share of national assets in the total domestic investment portfolio. The policy of promoting capital markets is highlighted as key to attracting long-term investment, including venture capital, and footloose portfolio investment, but the risks associated with globally mobile capital are pointed out, as well as possible mitigating policies, particularly in light of recent evidence from the Asian crisis.
10. The Conference may wish to reflect on the fact that notwithstanding the notable efforts made by many African countries to implement economic and financial reforms, FDI flows to most of them remain marginal. The Conference may further wish to discuss and share experiences of implementing FDI-friendly policies and the different outcomes in various countries. The Conference may also wish to reflect on the role of the International Finance Corporation (IFC) in catalyzing private sector investment and the effectiveness of the Multilateral Investment Guarantee Agency (MIGA) in offsetting the non-commercial risks perceived by potential investors in Africa. How can these agencies’ work be made more effective in the task of financing Africa’s development?

NAME UFOR NKIRUKA JULIETA
REG 2015/204110
DEPT ECONOMICS
COURSE ECO362

CHAPTER FIVE
CRITICALLY DISCUSS THE CONCEPT OF NON-GOVERNMENTAL ORGANIZATION (NGOS)
Nongovernmental organizations (NGOs) Non-profit organizations often involved in providing financial and technical assistance to developing countries.
It is increasingly recognized that development success depends not only on a vibrant private sector and an efficient public sector but on a vigorous citizen sector as well. Relying on the former sectors alone has been compared to trying to sit on a two-legged stool. Organizations of the citizen sector are usually termed nongovernmental organizations (NGOs) in the development context but are also referred to as nonprofit, voluntary, independent, civil society, or citizen organizations. A wide range of organizations fall under the NGO banner. The United Nations Development Program defines an NGO as any non-profit, voluntary citizens’ group which is organized on a local, national or international level. Task-oriented and driven by people with a common interest, NGOs perform a variety of services and humanitarian functions, bring citizens’ concerns to governments, monitor policies and encourage political participation at the community level. They provide analysis and expertise, serve as early warning mechanisms and help monitor and implement international agreements. Some are organized around specific issues, such as human rights, the environment or health.40 Whereas governments rely on authority to achieve outcomes and private sector firms rely on market mechanisms to provide incentives for mutually beneficial exchange, civil society actors, working through NGOs, rely on independent voluntary efforts and influence to promote their values and to further social and economic development. The emergence of civil society actors such as NGOs as key players in global affairs is recognized by Nobel Peace Prizes given to the Campaign to Ban Landmines in 1997, Doctors without Borders in 1999, and Grameen Bank in 2006 (see the case study in Chapter 15), as well as individual laureates who have played key roles in establishing NGOs and other citizen organizations.

NAME UFOR NKIRUKA JULIETA
REG 2015/204110
DEPT ECONOMICS
COURSE ECO362
CHAPTER FOUR
OTHER FINANCIAL ASPECT OF DEVELOPMENT
It starts by reviewing the empirical evidence on finance and growth, highlighting studies which suggest that financial development may be ineffective in delivering growth in the poorest of countries. The paper proceeds to examine the likely sources of financial (under-)development and argues that: (a) the legal origins view has been largely discredited by lawyers; (b) government ownership of banks is much more of a symptom of weak institutions than a cause of financial under-development.
It then argues that political economy explanations of financial development, focussing on the role of incumbents, income and wealth inequality and the evolution of economic institutions, are much more promising hypotheses but remain largely untested. It calls for more work to test and develop further these ideas but warns against oversimplified notions of politics.
It ends by reviewing recent work on the political economy origins of financial development and the politics of financial reforms, which suggests that politics plays a greater and more complex role than has so far been recognised by the economics literature on finance and growth.
These contributions, acknowledge the importance of strong institutions for economic growth, but do not focus on financial development per se. They ascribe institutional quality differences to varying initial endowments and dynamic political economy factors.
The initial endowment hypothesis suggests that the disease environment encountered by a country can be a major obstacle for the establishment of institutions that would promote long run prosperity. Thus, it is argued that European colonial powers established extractive institutions that are unsuitable for long-term growth where the environment was unfavourable and institutions that were better suited for growth where they encountered favourable environments. The economic institutions hypothesis addresses the main shortcoming of the endowment hypothesis, by proposing a dynamic political economy framework in which differences in economic institutions are the fundamental causes of differences in economic development. Economic institutions, which determine the incentives and constraints of economic agents, are social decisions that are chosen for their consequences. Political institutions and income distribution are the dynamic forces that combine to shape economic institutions and outcomes

Anonymous UFOR NKIRUKA JULIET said…
Anonymous UFOR NKIRUKA JULIET said…
NAME UFOR NKIRUKA JULIETA
REG 2015/204110
DEPT ECONOMICS
COURSE ECO362
CHAPTER THREE
GOVERNMENT FINANCING, ITS SOURCES AND DEVELOPMENT FINANCIN IN NIGERIA AND THEIR SOURCES
A major cause of political conflict in Nigeria since independence has been the changing formula for allocating revenue by region or state. Before 1959 all revenues from mineral and agricultural products were retained by the producing region. But after 1959, the region retained only a fraction of the revenue from mineral production. This policy was a major source of dissatisfaction in the Eastern Region, which seceded in May 1967 as the would-be state of Biafra. By contrast, the revenue from agricultural exports was retained by regional marketing boards after 1959, but the agricultural exports of eastern Nigeria were smaller than those of the other major regions.
The rapid growth of petroleum revenue in the 1970s removed most of the severe constraints placed on federal and regional or state budgets in the 1960s. Total federal revenue grew from N306.4 million in 1966 to N7, 791.0 million in 1977, a twenty fivefold increase in current income in eleven years. Petroleum revenue as a percentage of the total went from 26.3 percent in 1970 to more than 70 percent by 1974-77.
During the civil war, most of the twelve new states created in 1967 faced a revenue crisis. But a 1970 decree brought the states closer to fiscal parity by decreasing the producing state's share of export, import, and excise duties, and of mining rents and royalties, and by increasing the share allocated to all states and the federal government. Also, in 1973 the commodity export marketing boards, which had been a source of political power for the states, were brought under federal control. Other changes later in the 1970s further reduced claims to revenue based on place of origin. In the 1970s, the federal government was freed to distribute more to the states, thus strengthening federal power as well as the states' fiscal positions. Statutory appropriations from the federal government to the states, only about N128 million in FY1966, increased to N1,040 million in 1975 with the oil boom, but dropped to N502.2 million in 1976, as oil revenues declined.
The burgeoning revenues of the oil boom had encouraged profligacy among the federal ministries. Government deficits were a major factor in accelerated inflation in the late 1970s and the early 1980s. In 1978 the federal government, compelled to cut spending for the third plan, returned much of the financial responsibility for housing and primary education to state and local governments. Federal government finances especially drifted into acute disequilibrium between 1981 and 1983, at the end of President Shagari's civilian administration, with the 1983 federal government deficit rising to N5.3 billion (9.5 percent of GDP) at the same time that external debt was increasing rapidly. The state governments' deficit compounded the problem, with the states collectively budgeting for a deficit of N6.8 billion in 1983.

NAME UFOR NKIRUKA JULIETA
REG 2015/204110
DEPT ECONOMICS
COURSE ECO362

CHAPTER ONE
DISCUSS THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACTS
Development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of “real” per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population—how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure of production and employment so that agriculture’s share of both declines and that of the manufacturing and service industries increases. Development strategies have therefore usually focused on rapid industrialization, often at the expense of agriculture and rural development. With few exceptions, such as in development policy circles in the 1970s, development was until recently nearly always seen as an economic phenomenon in which rapid gains in overall and per capita GNI growth would either “trickle down” to the masses in the form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to “getting the growth job done.” Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP).

2.2. Interactions with the State
As it is mentioned already, one of the fundamental reasons that NGOs have received so much attention of late is that they are perceived to be able to do something that national governments cannot or will not do. However, it is important to recognize that relations between NGOs and governments vary drastically from region to region and country to country. For example, NGOs in India derive much support and encouragement from their government and tend to work in close collaboration with it. NGOs from Africa also acknowledged the frequent need to work closely with their government or at least avoid antagonizing the authorities. Most NGOs from Latin America offered a much different perspective: NGOs and other grassroots organizations as an opposition to government.
In the Third World, the difficult economic situation may force governments to yield to pressure from multilateral agencies to give money to NGOs. In these cases, the governments act as conduits of funds but is some cases try to maintain control over these NGOs precisely because of their access to funds. However, it was also recognized that through the multilateral donors, NGO cooperation and solidarity can influence policy at the national levels. Multilateral donors may serve as a kind of "buffer" between government and NGOs in order to avoid unnecessary current tensions and to promote coherent national development strategies.
A Healthy State-NGO Relationship
A healthy relationship is only conceivable when both parties share common objectives. If the government’s commitment to improving of the provision of urban services is weak, NGOs will find dialogue and collaboration frustrating or even counter-productive. Likewise, repressive governments will be wary of NGOs which represent the poor or victimized.
Where government has a positive social agenda (or even where individual ministries do) and where NGOs are effective, there is the potential for a strong, collaborative relationship. This does not mean the sub-contracting of placid NGOs, but a "genuine partnership between NGOs and the government to work on a problem facing the country or a region… based on mutual respect, acceptance of autonomy, independence, and pluralism of NGO opinions and positions."
However, as Tandon points out, such relations are rare, even when the conditions are met. The mutual distrust and jealousy appears to be deep-rooted. Governments fear that NGOs erode their political power or even threaten national security. And NGOs mistrust the motivation of the government and its officials.
Though controversial and risky, many of the more strategic NGOs are overcoming their inhibitions and are seeking closer collaboration with governments. However, with closer collaboration comes increased risk of corruption, reduced independence, and financial dependency.

Role of NGOs in Today’s Globalizing World
NGOs nationally and internationally indeed have a crucial role in helping and encouraging governments into taking the actions to which they have given endorsement in international fora. Increasingly, NGOs are able to push around even the largest governments. NGOs are now essentially important actors before, during, and increasingly after, governmental decision-making sessions.
The UN Secretary-General in 1995 said:
"Non-governmental organizations are a basic element in the representation of the modern world. And their participation in international organizations is in a way a guarantee of the latter’s political legitimacy. On all continents non-governmental organizations are today continually increasing in number. And this development is inseparable from the aspiration to freedom and democracy which today animates international society… From the standpoint of global democratization, we need the participation of international public opinion and the mobilizing powers of non-governmental organizations".
NGOs are facing a challenge to organize themselves to work in more global and strategic ways in the future. They must build outwards from concrete innovations at grassroots level to connect with the forces that influence patterns of poverty, prejudice and violence: exclusionary economics, discriminatory politics, selfish and violent personal behavior, and the capture of the world of knowledge and ideas by elites. In a sense this is what NGOs are already doing, by integrating micro and macro-level action in their project and advocacy activities. "Moving from development as delivery to development as leverage is the fundamental change that characterizes this shift, and it has major implications for the ways in which NGOs organize themselves, raise and spend their resources, and relate to others."
In the dynamic environment, NGOs need to find methods of working together through strategic partnerships that link local and global processes together. By sinking roots into their own societies and making connections with others inside and outside civil society, NGOs can generate more potential to influence things where it really matters because of the multiple effects that come from activating a concerned society to work for change in a wider range of settings.
The small size and limited financial resources of most NGOs make them unlikely challengers of economic and political systems sustained by the interests of big government and big businesses. However, the environment, peace, human rights, consumer rights and women’s movements provide convincing examples of the power of voluntary action to change society. This seeming paradox can be explained by the fact that the power of voluntary action arises not from the size and resources of individual voluntary organizations, but rather from the ability of the voluntary sector to coalesce the actions of hundreds, thousands, or even millions of citizens through vast and constantly evolving networks that commonly lack identifiable structures, embrace many chaotic and conflicting tendencies, and yet act as if in concert to create new political and institutional realities. These networks are able to encircle, infiltrate, and even co-opt the resources of opposing bureaucracies. They reach across sectors to intellectuals, press, community organizations. Once organized, they can, through electronic communications, rapidly mobilize significant political forces on a global scale.

They can also be classified according to the approach they undertake, whether they operate projects directly or focus on tasks such as advocacy and networking.
1. Relief and Welfare Agencies: such as missionary societies.
Technical innovation organizations: organizations that operate their own projects to pioneer new or improved approaches to problems, generally within a specific field.
Public Service contractors: NGOs mostly funded by Northern governments that work closely with Southern governments and official aid agencies. These are contracted to implement components of official programs because of advantages of size and flexibility.
Popular development agencies: both Northern and Southern NGOs that concentrate on self-help, social development and grassroots democracy.
Grassroot development organizations: Southern locally-based development NGOs whose members are poor or oppressed themselves, and who attempt to shape a popular development process (these often receive funding from Development Agencies).
Advocacy groups and networks: organizations without field projects that exist primarily for education and lobbying.
a) NGO types by orientation:
Charitable Orientation often involves a top-down paternalistic effort with little participation by the "beneficiaries". It includes NGOs with activities directed toward meeting the needs of the poor -distribution of food, clothing or medicine; provision of housing, transport, schools etc. Such NGOs may also undertake relief activities during a natural or man-made disaster.
Service Orientation includes NGOs with activities such as the provision of health, family planning or education services in which the program is designed by the NGO and people are expected to participate in its implementation and in receiving the service.
Participatory Orientation is characterized by self-help projects where local people are involved particularly in the implementation of a project by contributing cash, tools, land, materials, labor etc. In the classical community development project, participation begins with the need definition and continues into the planning and implementation stages. Cooperatives often have a participatory orientation.
Empowering Orientation is where the aim is to help poor people develop a clearer understanding of the social, political and economic factors affecting their lives, and to strengthen their awareness of their own potential power to control their lives. Sometimes, these groups develop spontaneously around a problem or an issue, at other times outside workers from NGOs play a facilitating role in their development. In any case, there is maximum involvement of the people with NGOs acting as facilitators.
b) NGO Types by level of operation:
Community-based Organizations (CBOs) arise out of people’s own initiatives. These can include sports clubs, women’s organizations, neighborhood organizations, religious or educational organizations. There are a large variety of these, some supported by NGOs, national or international NGOs, or bilateral or international agencies, and others independent of outside help. Some are devoted to rising the consciousness of the urban poor or helping them to understand their rights in gaining access to needed services while others are involved in providing such services.
Citywide Organizations include organizations such as chambers of commerce and industry, coalitions of business, ethnic or educational groups and associations of community organizations. Some exist for other purposes, and become involved in helping the poor as one of many activities, while others are created for the specific purpose of helping the poor.

Debt to finance exhaustive spending is sometimes called "dead-weight" debt. We have avoided this term because it suggests, improperly in our view, that such debt is necessarily obstructive in the growth process in contrast with debt that finances expansion of productive capacity. Finances are accessible, if financial intermediaries do not evolve. The primary function of intermediaries is to issue debt of their own, indirect debt, in soliciting loanable funds from surplus spending units, and to allocate these loanable funds among deficit units whose direct debt they absorb. When intermediaries intervene in the flow of loanable funds, the accumulation of financial assets by surplus spending units continues to equal the accumulation of debt by deficit units. The rise of intermediaries-of institutional savers and investors-does not affect at all the basic equalities in a complete social accounting system between budgetary deficits and surpluses, purchases and sales of loanable funds, or accumulation of financial assets and debt. But total debt, including both the direct debt that intermediaries buy and the indirect debt of their own that they issue, rises at a faster pace relative to income and wealth than when finance is either direct or arranged internally. Institutionalization of saving and investment quickens the growth rate of debt relative to the growth rates of income and wealth.
Commercial Banks and Competitive Intermediaries
A monetary system, and especially its commercial banking component, has commonly been the first significant financial intermediary to complicate the simplicity of self-finance and direct finance. Even as late as a half- century ago in this country, the commercial banks offered the predominant escape from self-finance and direct finance. The role of the banks has been, first, to borrow loanable funds from spending units with surpluses, issuing indirect securities in exchange.

Non-governmental Organizations and their Impact on Development
What are NGOs?
Non-governmental organizations (NGOs) have become quite prominent in the field of international development in recent decades. But the term NGO encompasses a vast category of groups and organizations.
The World Bank, for example, defines NGOs as private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development. A World Bank Key Document, Working With NGOs, adds, In wider usage, the term NGO can be applied to any non-profit organization which is independent from government. NGOs are typically value-based organizations which depend, in whole or in part, on charitable donations and voluntary service. Although the NGO sector has become increasingly professionalized over the last two decades, principles of altruism and voluntarism remain key defining characteristics.
Different sources refer to these groups with different names, using NGOs, Civil Society Organizations (CSOs), Private Voluntary Organizations (PVOs), charities, non-profits charities/charitable organizations, third sector organizations and so on.

Development Financing in Nigeria
Development financing is one of the requirements for sustainable economic growth in any economy. The supply of finance to various sectors of the economy will promote the growth of the economy in a holistic manner and this, will make development, welfare improvement to proceed at a faster rate. The Central Bank of Nigeria development finance initiatives involve the formulation and implementation of various policies, innovation of appropriate products and creation of enabling environment for financial institutions to deliver services in an effective, efficient and sustainable manner. The initiatives are mainly targeted at agricultural sector, rural development and micro, small and medium enterprises.
Financing for Development: International Financial Flows after 2015
Until the year 2000, investments by developing countries hovered around 4.5 percent of global output, while savings were around 4 percent. The gap between these was the needed external finance for development. It averaged $40 billion per year in the 1980s and $80 billion in the 1990s. Since 2000, however, developing countries as a group have had higher savings than investments, generating a surplus of over $340 billion per year. In most assessments, this surplus is expected to continue into the future.
The developing world, however, is not a homogeneous group of countries so simple aggregate figures can mislead. Sub-Saharan Africa, Latin America and the Caribbean, and emerging and developing Europe currently need large amounts of external financing and are projected to need additional financing in the future, with the financing need in sub-Saharan Africa being most acute. In other regions, domestic savings are more than sufficient to cover investment financing needs.
Similarly, in some countries and regions, government revenues are more than sufficient to provide for basic public services, like health and education, while in other countries and regions, even where there is an external surplus, there is a public sector deficit that needs direct external financing.
Financing for development must address these twin issues: the adequacy of financing to provide for sufficient public expenditures to meet desired social and economic investments, and the adequacy of long-term financing to allow economies to grow and develop to their full potential.
The UN has suggested ranges of 15 to 20 percent of GDP for government expenditure needs in developing countries, or about $8 trillion for all emerging and developing economies by 2019. Looking at needs another way, between 2000 and 2010, domestic and external investments in emerging and developing countries quadrupled from $1.6 trillion, to $6.9 trillion, and, according to the International Monetary Fund (IMF), they will double again to $13.8 trillion by 2019. While the magnitudes are smaller, the trends for Africa are similar: a tripling of investment between 2000 and 2010, and approximately $0.5 trillion in investment is forecast for 2019.
Of course, financing needs, whether for government expenditures or for investments more broadly, depend heavily on policy frameworks. The development outcomes that public expenditures and investments seek to generate can be improved when sensible policies are put in place. So any discussion of financing is incomplete without a country-by-country assessment of the potential for policy reform. But in the right policy environment, more financing can help accelerate development.

Government Financing
How a government chooses to finance its activities can have important effects on the distribution of income and wealth (income redistribution) and on the efficiency of markets (effect of taxes on market prices and efficiency). The issue of how taxes affect income distribution is closely related to tax incidence, which examines the distribution of tax burdens after market adjustments are taken into account. Public finance research also analyzes effects of the various types of taxes and types of borrowing as well as administrative concerns, such as tax enforcement.
Government expenditures are financed primarily in three ways:
Government revenue
Taxes
Non-tax revenue (revenue from government-owned corporations, sovereign wealth funds, sales of assets, or seigniorage)
Government borrowing
Money creation
Taxes
Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day tax burden.[7] The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.[8]
A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as corvée labor. A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government [ . . .] a payment exacted by legislative authority."[9] A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government [ . . .] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."
There are various types of taxes, broadly divided into two heads – direct (which is proportional) and indirect tax (which is differential in nature):
Stamp duty, levied on documents, Excise tax (tax levied on production for sale, or sale, of a certain good), Sales tax (tax on business transactions, especially the sale of goods and services), Value added tax (VAT) is a type of sales tax, Services taxes on specific services, Gift tax, Duties (taxes on importation, levied at customs), Corporate income tax on corporations (incorporated entities), Wealth tax, Personal income tax (may be levied on individuals, families such as the Hindu joint family in India, unincorporated associations, etc.)

Public Finance
Public finance includes tax, spending, budgeting and debt issuance policies that all affect how a government pays for the services it provides to the public.
The federal government helps prevent market failure by overseeing the allocation of resources, distribution of income and stabilization of the economy. Regular funding is secured mostly through taxation. Borrowing from banks, insurance companies and other governments also help finance the government.
In addition to managing money for its day-to-day operations, a government body also has larger social responsibilities. Its goals include attaining an equitable distribution of income for its citizens and enacting policies that lead to a stable economy.
Global Finance
Global finance refers to the financial system consisting of regulators and various financial institutions that conduct their business on an international level. As a result of this definition, global finance does not constitute any financial businesses or regulators that act on a national or regional level. The primary components of global finance are the enormous international institutions, such as the bank for International Settlements or the International monetary Fund, as well as various national agencies and government departments, such as various central banks, finance ministries, and those private companies who act on a global scale.
Prominent International Institutions aligned with Global Finance
The International Monetary Fund is a financial institution that is responsible for maintaining the international balance of payments accounts of its member states. The International Monetary Fund may also act as a lender (typically in last resort situations) for state members who are in financial distress due to currency crises or struggles that revolve around meeting the balance of payment when debt default is present. Membership in the International Monetary Fund is based on quota or the amount of funding a member state (country) provides to the fund. The evaluation of funding is based on a relative investigation of the member state’s role in the international trading system and global finance in general.
Another prominent member of global finance is the World Bank, which is an institution that aims to offer funding for development projects that, for the most part, reside in developing nations. The World Bank assumes the credit risk of these developing nations; the World Bank will provide financing to projects that otherwise would not be able to access such funding.

The World Trade Organization is also another principle player aligned with global finance. The World Trade Organization is responsible for settling disputes and negotiating international trade agreements with various international companies, institutions or government agencies.

CHAPTER FOUR
CONCLUSION
This work shows that there is an inter connection between government financing and economic development. As the spending activities of the government increase, its citizenry is equipped with more funds to meet their basic needs thereby improving their living standards and reducing the rate of poverty and thus bringing about development in the economy of such nation.

More recently, Cornwall (2005) has shown how Action Aid Brazil’s understanding of partnership with Centro Mulheres do Cabo, a local community organization, has developed from simply being about ‘establishing a project that could be pursued together’ to becoming a much broader, two-way process in which the parties challenge each other with critical comments and ideas, exchange contacts and networks, and assist each other with expertise and methodologies. NGOs have therefore become concerned to reflect on the many meanings of partnership, and some have prepared policy documents that aim to make clearer the objectives and terms of their various partnerships (Box 5.12). The origins of a partnership are likely to be important for its performance. Some NGOs may enter into new organizational relationships in order to gain access to external resources which are conditional on partnership. Others may drift into partnerships without adequately considering the wider implications. For example, new roles for staff may have to be created in order to service the partnership properly, or management systems may be required to monitor the progress of new activities. NGOs in particular are vulnerable to being viewed instrumentally, as agents which have been enlisted simply to work to the agendas of others as ‘reluctant partners’ (Farrington and Bebbington 1993). In a study of partnerships within an aquaculture project in Bangladesh, Lewis (1998a) found that so-called partnerships described in the project documents to be occurring between NGOs and government agencies were more a product of opportunities for gaining access to external resources than any kind of complementarity or functional logic.
‘Active’ partnerships are those built through ongoing processes of negotiation, debate, occasional conflict, and learning through trial and error. Risks are taken, and although roles and purposes are clear they may change according to need and circumstance. ‘Dependent’ partnerships, on the other hand, have a blueprint character and are constructed at the project planning stage according to a set of rigid assumptions about comparative advantage and individual agency interests, often linked to the availability of outside funding. There may be consensus among the partners, but this often reflects unclear roles and responsibilities rather than the creative conflicts which emerge within active partnerships (Lewis 1998a). Partnership may bring extra costs, which are easily underestimated, such as new lines of communications requiring demands on staff time, vehicles and telephones; new responsibilities for certain staff; and the need to share information with other agencies. Evans (1996) argues that, rather than NGOs and government merely complementing each other’s work in a functional sense or engaging in competition with each other, a more useful ‘synergy’ can be created if the relationship between them becomes a mutually reinforcing one based on a clear division of labour and mutual recognition and acceptance of these roles observed that good progress with development in north-east Brazil was not based on the special strengths of any one particular type of organizational actor, but resulted instead from a complex, three-way dynamic between central government, local government and civil society.

Critics such as Kaldor (2003) instead point to the tendency for NGOs to represent sometimes the domestication or taming of previously radical grassroots social movements for change, which become institutionalized, while others see NGOs as professionalized, externally funded competitors to social movements which may draw away and dissipate their radical energies and their grassroots support base. In Brazil, Dagnino (2008) argues that local social movements have been crowded out, in the engagement between neoliberal development agencies and NGOs in relation to building participation and democratization, with the result that the broader concept of citizenship has been depoliticized. On the other hand, distinguishing between movements and organizations is not always a straightforward matter. Hopgood (2006) shows that Amnesty International can, in many respects, be seen as much as a ‘movement’ as an ‘NGO’, reflecting the idea that when it comes to value-driven public action around issues such as development or human rights, the boundaries between organizations and movements can be ambiguous. Hulme (2008) also suggests that making a clear conceptual distinction between NGOs and social movements is not always useful, given ‘the fluidity of analytical boundaries’.
NGO roles in contemporary development practice
Service delivery: The implementation of service delivery by NGOs is important simply because many people in developing countries face a situation in which a wide range of vital basic services are unavailable or of poor quality (Carroll 1992). There has been a rapid growth in NGO service provision, as neoliberal development policies have emphasized a decreasing role for governments as direct service providers. In many parts of the developing world, government services have been withdrawn under conditions which have been dictated by the World Bank and other donors, leaving NGOs of varying types and with capacities and competence of varying quality to pick up the peices. The motivation for an NGO to become involved in providing services may vary. Sometimes it does so in order to meet previously unmet needs, while at other times an NGO is ‘contracted’ by the government (or by a donor, or a company) to take over the delivery of services which were formerly provided by government. Not all NGOs provide services directly to local communities. Some seek to tackle poverty indirectly by providing other forms of services, such as giving training to other NGOs, government or the private sector, or undertaking applied research as a commission, or providing specialized inputs such as conflict-resolution training. The ‘good governance’ agenda has emphasized a more flexible provision of services through using a range of private sector and nongovernmental actors. As Brett (1993) points out, NGOs exist as actors within a broader, pluralistic organizational universe, alongside the state and private sector, which has the potential to expand the range of institutional choices open to governments and to communities. In some contexts, such as the UK, this has become known as the purchaser–provider split in which the government is responsible for purchasing the services which are to be supplied, but then contracts another agency to actually provide them. Some donors have argued for a stronger role for NGOs in service delivery work because they are believed to possess a set of distinctive organizational capacities and comparative advantages, such as flexibility, commitment and cost-effectiveness Yet in practice, the diversity of NGOs as organizations means that such generalizations are often difficult to sustain. While some NGOs have proved themselves to be highly effective service providers in certain sectors and contexts, others are found to perform poorly.

NGOs were seen as fostering local participation, since they were more locally rooted organizations, and therefore closer to marginalized people than most officials were. Poor people were often found to have been bypassed by existing public services, since many government agencies faced resource shortages and their decision-making processes were often captured by elites. Many also claimed that NGOs were generally operating at a lower cost, due to their use of voluntary community input. Finally, NGOs were seen as possessing the scope to experiment and innovate with alternative ideas and approaches to development. Some NGOs were also seen as bringing a set of new and progressive development agendas of participation, gender, environment and empowerment that were beginning to capture the imagination of many development activists at this time. For other donors and some governments, concerned with the need to liberalize and roll back the state as part of structural adjustment policies (SAPs), NGOs were also seen as a cost-effective and efficient alternative to public sector service delivery. Structural adjustment was a condition of many of the loans provided by the World Bank and the IMF from the late 1970s onwards which obliged governments to reduce the role of the state in the running of the economy and the social sectors, to open up the economy to foreign investment and to reduce barriers to trade.
NGOs and contemporary development theory
Three other areas of current applied development theory are relevant to NGOs, and these are briefly introduced here.
Social exclusion
Originating from work on social policy and poverty in industrialized countries, the concept of social exclusion has come to be incorporated into development theory in some quarters. As an approach to understanding poverty, it shifts attention away from simple economic measurements of poverty, to focus on the processes which produce it and the capacity of people to operationalize their rights to social and economic well-being. As Kabeer (2004: 2) writes, the value of social exclusion is in offering an integrated way of looking at different forms of disadvantage which have tended to be dealt with separately … In particular it captures the experiences of the certain groups and categories in a society of somehow being ‘set apart’ from others, of being ‘locked-out’ or ‘left behind’ in a way that the existing frameworks for poverty analysis had failed to capture. What is relevant to NGOs is that the framework of social exclusion draws attention to the need for appropriate institutional responses to social disadvantage which can address causes as well as outcomes, and the problem that, as De Haan (2007: 134) points out, ‘a dominant neo-liberal ideological framework tends to reduce state responsibility in poverty alleviation, reduction of inequalities and social integration’. It also serves to underline for NGOs the importance of working, beyond simply service delivery, to rights-based approaches that can strengthen the voices of people who find themselves excluded from policy and political processes.

CHAPTER THREE
3.0 DISCUSS OTHER FINANCIAL ASPECTS OF DEVELOPMENT
The legal origins puts forward the idea that common law based systems, are better suited than civil law based systems, for the development of capital markets. This is because civil law evolved to protect private property from the authority while common law was developed with the aim of addressing corruption of the judiciary and enhancing the powers of the state. Consequently, it is argued that capital markets developed faster in countries with common law systems than in those with civil law systems. The view that common-law countries have better shareholder protection than civil law countries has been challenged in an important recent study. At such finances are used to developed sound legal system that will eradicate all forms of inefficiency in the market systems. This aspect of financial development has to do with the establishment of sound institutional system that will ensure that the right of everyone is protected. Unlike the civil laws that seek to satisfy the objective of those in power, this aspects of financial development advocates the funding of projects that will look into the origins of different laws that coordinate the production, consumption, and distribution system in every economy, so as to ensure the equitable distribution of resources in the society. Broad-based property rights protection is critical for investors and, consequently, for financial development. It takes central role in the political economy which, however, places little if any emphasis on the origin of the legal system. We may therefore conclude that while there is a broad consensus that a properly functioning legal system that provides effective protection for investors‟ property rights is important for financial development (and growth), the legal origins view is not widely accepted, indeed it has been largely discredited by lawyers.
These contributions, acknowledge the importance of strong institutions for economic growth, but do not focus on financial development per se. They ascribe institutional quality differences to varying initial endowments and dynamic political economy factors.
The initial endowment hypothesis suggests that the disease environment encountered by a country can be a major obstacle for the establishment of institutions that would promote long run prosperity. Thus, it is argued that European colonial powers established extractive institutions that are unsuitable for long-term growth where the environment was unfavourable and institutions that were better suited for growth where they encountered favourable environments. The economic institutions hypothesis addresses the main shortcoming of the endowment hypothesis, by proposing a dynamic political economy framework in which differences in economic institutions are the fundamental causes of differences in economic development. Economic institutions, which determine the incentives and constraints of economic agents, are social decisions that are chosen for their consequences. Political institutions and income distribution are the dynamic forces that combine to shape economic institutions and outcomes.

Under the mandatory scheme, we have: Mandatory contributions of Nigerian workers in both the public and private sectors. Participation in the scheme is required for all workers earning N3,000 per annum or more. The participants contribute 2.5 per cent of their monthly salaries to the housing fund at an interest rate of 4 per cent to each savings/contribution made. Contributions of 10 per cent of banks’ loans and advances to the Fund at an interest rate of 1 per cent above the rate on current account. This is subsequently transferred to the FMBN for the housing sector through a properly devised system, thereby liberating deposit money banks from the burden of mortgage loans. Contributions by the Nigerian Social Insurance Trust Fund (NSTIF) and the insurance companies, which are expected to invest a minimum of 20 per cent of their non- life funds and 40 per cent of their life funds in real estate development, of which not less than 50 per cent must be channelled through FMBN, at an interest rate not exceeding 4 per cent. Under this arrangement, government now relaxes the existing restrictive provisions as contained in the insurance Decree No. 59 of 1976 and the Trustee investment Act No 13 of 1962 so as to allow the insurance industry and pension funds to invest huge resources in housing development. Contributions from the Federal, State and Local Governments- Under this scheme, budgetary allocation is made at all levels of Government to the housing sector to finance low income housing schemes. In this respect, the Federal, State and Local Governments make direct budgetary allocation of a sum not below 2.5 per cent of their revenue to the housing scheme. The Federal Government also expanded the Infrastructure Development Fund (IDF) from which the State and Local Governments can borrow to provide basic infrastructural facilities.
Cooperative Societies
Cooperative societies pool individual members’ resources together from where soft loans are advanced to their members. They have become very popular especially in land purchase, particularly in semi-urban areas. Cooperative societies are also known to be involved in the provision of credit for housing to their members.
2.2 SOURCES OF GOVERNMENT FINANCING
Government expenditures are financed primarily in three ways:
• Government revenue
o Taxes
o Non-tax revenue (revenue from government-owned corporations, sovereign wealth funds, sales of assets, or seigniorage)
• Government borrowing
• Money creation
Taxes
Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day tax burden.[7] The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.[8]

Specialised Institutions
The main competing institutions with banks and insurance companies in the area of housing have been specialized institutions, such as semi-government agencies, mortgage banks and building societies.
State/Municipal Government Financing
State and Municipal Governments have also been known to be involved in mortgage financing, albeit, on a limited scale. The sources of such fund usually include budgetary allocation,
complemented with facilities from development institutions. Such funds are often channelled through the states’ development finance institutions such as the Housing Corporations or Investment and Property Development Corporations for on lending to individuals for residential
building construction. Indeed, the erstwhile regional governments of the 1960s set up the regional housing corporations, with clear mandate to provide long term credit for housing development.
The Federal Mortgage Bank of Nigeria (FMBN)
The Federal Mortgage of Bank of Nigeria commenced operations in 1978, following the promulgation of the FMBN Decree No. 7 of January 1977 as a direct federal government intervention to accelerate its housing delivery programme. The FMBN is expected to expand and coordinate mortgage lending on a nation-wide basis, using resources from deposits mobilised and equity contributions by the Federal Government and CBN at rates of interest below the market rates. By mid-1980s, the FMBN was the only mortgage institution in Nigeria. However, it is arguable if this mandate has been satisfactorily performed to date.
Primary Mortgage Institutions (PMIs)
The promulgation of the Mortgage Institutions Decree No. 53 of 1989 provided the regulatory framework for the establishment and operation of Primary Mortgage Institutions(PMI) by private entrepreneurs. The FMBN under the decree became the apex institution, which regulates primary mortgage institutions and was empowered to license the PMIs as second-tier housing finance institutions. The PMIs, under the Decree were to mobilize savings from the public and grant housing
loans to individuals, while the FMBN mobilizes capital funds for the primary mortgage institutions. The PMIs were expected to enhance private sector participation in housing finance.
The Federal Mortgage Finance Limited (FMFL)
The Federal Mortgage Finance Limited was established in 1993 to carry out the retail aspect of mortgage financing and provide credible and responsive housing finance services, while FMBN became the nation’s apex mortgage lending agency. The FMFL is expected to provide long-term credit facilities to mortgage institutions in Nigeria to enable them grant comparable facilities to individuals desiring to acquire houses of their own; encourage and promote the emergence and growth of primary mortgage institutions (PMIs) to serve the need of housing delivery in all parts of Nigeria; and to collect, manage and administer contributions to the National Housing Fund (NHF) in accordance with the provision of the NHF Decree No. 3 of 1992.

Financial system’s role in Balanced regional development
Through the financial system, backward areas could be developed by providing various concessions or sops. This ensures a balanced development throughout the country and this will mitigate political or any other kind of disturbances in the country. It will also check migration of rural population towards towns and cities.
Role of financial system in attracting foreign capital
Financial system promotes capital market. A dynamic capital market is capable of attracting funds both from domestic and abroad. With more capital, investment will expand and this will speed up the economic development of a country.
Financial system’s role in Economic Integration
Financial systems of different countries are capable of promoting economic integration. This means that in all those countries, there will be common economic policies, such as common investment, trade, commerce, commercial law, employment legislation, old age pension, transport co-ordination, etc. We have a standing example of European Common Market which has gone to the extent of creating a common currency, representing several countries in Western Europe.
Role of financial system in Political stability
The political conditions in all the countries with a developed financial system will be stable. Unstable political environment will not only affect their financial system but also their economic development.
Financial system helps in Uniform interest rates
The financial system is capable of bringing a uniform interest rate throughout the country by which there will be balanced movement of funds between centres which will ensure availability of capital for all kinds of industries.
Financial system role in Electronic development:
Due to the development of technology and the introduction of computers in the financial system, the transactions have increased manifold bringing in changes for the all-round development of the country. The promotion of World Trade Organization (WTO) has further improved international trade and the financial system in all its member countries.
The main linkage between finance and development in an economy is that financing an economy could be in form of an increase in the government’s spending and this will lead to an increase in the wages of its populace which could lead to inflation but if controlled would improve the leading standard f the citizens of such country and thereby bringing about economic development in the country.

The development of any country depends on the economic growth the country achieves over a period of time. Economic growth deals about investment and production and also the extent of Gross Domestic Product in a country. Only when this grows, the people will experience growth in the form of improved standard of living, namely economic development.
The following are the roles of financial system in the economic development of a country.
Savings-investment relationship
To attain economic development, a country needs more investment and production. This can happen only when there is a facility for savings. As, such savings are channelized to productive resources in the form of investment. Here, the role of financial institutions is important, since they induce the public to save by offering attractive interest rates. These savings are channelized by lending to various business concerns which are involved in production and distribution.

Financial systems help in growth of capital market
Any business requires two types of capital namely, fixed capital and working capital. Fixed capital is used for investment in fixed assets, like plant and machinery. While working capital is used for the day-to-day running of business. It is also used for purchase of raw materials and converting them into finished products.
• Fixed capital is raised through capital market by the issue of debentures and shares. Public and other financial institutions invest in them in order to get a good return with minimized risks.
• For working capital, we have money market, where short-term loans could be raised by the businessmen through the issue of various credit instruments such as bills, promissory notes, etc.
Foreign exchange market enables exporters and importers to receive and raise funds for settling transactions. It also enables banks to borrow from and lend to different types of customers in various foreign currencies. The market also provides opportunities for the banks to invest their short term idle funds to earn profits. Even governments are benefited as they can meet their foreign exchange requirements through this market.
Government Securities market
Financial system enables the state and central governments to raise both short-term and long-term funds through the issue of bills and bonds which carry attractive rates of interest along with tax concessions. The budgetary gap is filled only with the help of government securities market. Thus, the capital market, money market along with foreign exchange market and government securities market enable businessmen, industrialists as well as governments to meet their credit requirements. In this way, the development of the economy is ensured by the financial system.

Financial system helps in Infrastructure and Growth
Economic development of any country depends on the infrastructure facility available in the country. In the absence of key industries like coal, power and oil, development of other industries will be hampered. It is here that the financial services play a crucial role by providing funds for the growth of infrastructure industries. Private sector will find it difficult to raise the huge capital needed for setting up infrastructure industries. For a long time, infrastructure industries were started only by the government in India. But now, with the policy of economic liberalization, more private sector industries have come forward to start infrastructure industry. The Development Banks and the Merchant banks help in raising capital for these industries.

CHAPTER TWO
2.0 DO A CRITICAL ANALYSIS OF THE LINKAGES AND INTER-LINKAGES BETWEEN FINANCE AND DEVELOPMENT
How does the structure and growth of the financial sector in a country affect the growth and development of its economy? How is the rural economy affected by improved access to financial services? What are the results of the new emphasis on improving the access of the poor to microfinance services? An explosion of empirical research in recent years provides new information that I use in this survey paper to address these issues. Many of the publications cited concerning the cross-country analysis of financial systems were based on the analysis of new multi-country data sets recently created covering the period 1960 to 1997.1 A recent AID conference on rural finance also provided important information summarizing the state of the art.
Questions about the relationship between finance and economic development
 How have economists’ views evolved over time regarding the relationship between the financial system and growth?
Historically, economists have held strikingly different views about the importance of the financial system for economic growth (Levine, 1997). On the one hand, John Hicks argued that it played a critical role in England’s industrialization, while Joseph Schumpeter reasoned that well-functioning banks spurred technological innovation by identifying and funding the most innovative entrepreneurs. On the other hand, Joan Robinson felt that where enterprise led, then finance would follow. Levine observed that the pioneers of development economics often did not even mention finance in their work. Gurley and Shaw (1960) identified contributions that finance makes to the economy and Patrick (1966) observed that some countries pursued supply-leading policies which were intended to accelerate growth by expanding the financial system. Goldsmith (1969) is credited with being the first to document the growth in financial activities that occurs with overall growth in the economy, but he hesitated to conclude the direction of causality: Were financial factors responsible for accelerating economic development or did financial development reflect economic growth? Shaw (1973) and McKinnon (1973) were the first to describe how controls and regulations contributed to financial repression, which negatively affects economic growth. Their models were narrowly focused on money, although their descriptive narratives were broader. For example, McKinnon noted the importance of finance by using the example of technology adoption by farmers. He thought economic growth would be slowed without efficient finance because it would be virtually impossible for farmers to self-finance the needed investment to speedily adopt new technologies. Wachtel (2001) noted that McKinnon forcefully argued for financial liberalization and, by 1990, concluded that “there is widespread agreement that flows of saving and investment should be voluntary and significantly decentralized in an open capital market at close to equilibrium interest rates” (p. 336).

Although nobody is certain when the concept originated, some people agree that development is closely bound up with the evolution of capitalism and the demise of feudalism.
Mansell and When also state that economic development has been understood since the World War II to involve economic growth, namely the increases in per capita income, and (if currently absent) the attainment of a standard of living equivalent to that of industrialized countries. Economic development can also be considered as a static theory that documents the state of an economy at a certain time. According to Schumpeter and Backhaus (2003), the changes in this equilibrium state to document in economic theory can only be caused by intervening factors coming from the outside. Economic growth deals with increase in the level of output, but economic development is related to increase in output coupled with improvement in social and political welfare of people within a country. Therefore, economic development encompasses both growth and welfare values.
1.1.4 STYLIZED
Stylize means representing in a way that simplifies details rather than trying to show naturalness or reality. If something is stylized, it is represented with an emphasis on a particular style, especially a style in which there are only a few simple details.
1.1.5 FACT
A fact is a statement that is consistent with reality or can be proven with evidence. The usual test for a statement of fact is verifiability- that is, whether it can be demonstrated to correspond to experience. Standard reference works are often used to check facts. Scientific facts are verified by repeatable careful observation or measurement(by experiments or other means). Fact also indicates a matter under discussion deemed to be true or correct, such as to emphasize a point or prove a disputed issue. Alternatively, fact may also indicate an allegation or stipulation of something that may or may not be a true.
1.2 THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACTS
Development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of “real” per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population—how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure of production and employment so that agriculture’s share of both declines and that of the manufacturing and service industries increases. Development strategies have therefore usually focused on rapid industrialization, often at the expense of agriculture and rural development. With few exceptions, such as in development policy circles in the 1970s, development was until recently nearly always seen as an economic phenomenon in which rapid gains in overall and per capita GNI growth would either “trickle down” to the masses in the form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to “getting the growth job done.” Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP).

Conclusion
Historically, DFIs have been created by governments around the world to promote economic growth and support social development. They typically provide credit and a wide range of capacity-building programs to households, SMEs, and even larger private corporations whose financial needs are not sufficiently served by private banks or local capital markets.
In doing so, they seek to promote strategic sectors of the economy, such as agriculture, international trade, housing, tourism, infrastructure, and green industries, among other sectors. Although many of the institutions were created several decades ago, data shows that many governments around the world still see them as a relevant instrument to pursue economic goals. It is estimated that around 20% of all development financial institutions currently in operation around the world were created in the past 17 years. A further 33% were set up during the 80s and 90s – the decades in which mass privatizations took place in various parts of the world.

CHAPTER FIVE
NON GOVERNMENTAL ORGANIZATION AND THEIR IMPACT ON DEVELOPMENT
Development is attracting more and more attention in the context of a changing aid architecture. Having previously been the recipient of capacity development efforts, NGOs now have the possibility to have an impact themselves on the capacity development of state institutions. Kasturi Sen (2006) gives a fitting summary of the changes already mentioned: “The current donor approach (through the Paris Declaration) emphasizes the need to strengthen the state and institutions, following two decades of downsizing of the public sector through policies and neo-liberalism. During this period, capacity building concentrated on NGOs and civil society. The most recent transition in donor policy [is] reverting to support for state institutions”. Beyond the multilateral aid agenda and NGOs’ consolidated role in development, does the concept of capacity development itself bear a promise to revitalize and diversify NGO action in education? What and where are the linkages between NGOs and capacity development? Before looking into these questions empirically, it is useful to elaborate the concept and characteristics of capacity development and its characteristics specifically in relation to NGOs, and to deduce some preliminary hypotheses. Capacity development is considered to be a long-term, endogenous process of developing sustainable abilities on all levels: the individual, organizational, institutional and system level. This is linked to and has implications for NGO action in four different, yet interdependent ways. Firstly, the all-encompassing approach of capacity development fits well with NGO action. NGO interventions are known for involving local stakeholders, for being adapted to the local context, for providing education and for developing capacity, all of which are aimed at community empowerment. NGO interventions generally go far beyond that of simply allocating financial resources. In fact, many NGOs fear being considered ‘bankers’ in development, “the implication being that it is not through the transfer of money that development really takes place, but through other ‘capacity building’ processes” (Taylor, 1999: 1).
Secondly, capacity development is linked to governance issues in the sense that it asks the question of who should be properly involved in what (Edgar and Chandler, 2005: 6). Within the education sector, the knowledge of NGOs in the realm of education implementation and management contributes to their relevance as actors. Such knowledge might prove to be particularly valuable in order to meet some of the current challenges in the education sector. However, the recognition of NGOs’ importance in this area is not always translated by increased possibilities for NGO input and influence. Razon and Persevera (2004: 12) demonstrates the difficulty of qualifying NGO input as ‘governance’ by asking the following question: “When, for example, Asian-Pacifi c education CSOs [civil society organizations] participate in country EFA processes, as they try to do, in fulfillment of their role as ‘partners’ in education policy development, yet, are confined to the narrow and token spaces of technical and consultative committee work, does this constitute ‘governance’?”

4.1 Regional and Multilateral DFIs

The principal components of development finance institutions (DFI) consist of both regional and multilateral DFIs. Although, there are bi-lateral development finance institutions mainly in developed economies but not predominant in less developing countries. These DFI components are mainly referred to as the multilateral development bank (MDB) formed through either regional or multilateral collaborations. The multilateral development banks (MDB) are institutions, created by a group of countries that provide financing and professional advising for the purpose of development. MDBs have large memberships including both developed donor countries and developing borrower countries. MDBs finance projects in the form of long-term loans at market rates, very-long term loans (also known as credits) below market rates, and through grants. The combined portfolio was US$182 billion in 2005.
The main multilateral DFIs include:
WB- World Bank
EBRD- European bank for Reconstruction and Development
AsDB- Asian Development Bank
IADB- Inter American Development Bank
AfDB- African Development Bank
IFC-International Finance Corporation
MIGA- Multilateral Investment Guarantee Agency
4.2 Sub- Regional Multilateral DFIs

There are also several "Sub-Regional" Multilateral Development Banks which serve as regional DFIs. Their membership typically includes only borrowing nations. The banks borrow from and lend to their members. These banks include:
Caribbean Development Bank (CDB)
Central American Bank for Economic Integration (CABEI)
East African Development Bank (EADB)
West African Development Bank (BOAD)
Black Sea Trade and Development Bank (BSTDB)
CorporaciónAndina de Fomento (CAF)

3.4 International public finance
The development contribution of ODA improved in the wake of the adoption of the Monterrey Consensus in 2002, with increased attention paid to making ODA more effective while increasing its volume. ODA reached an all-time high of $134.8 billion in net terms in 2013, after falling in 2011 and 2012.32 Nonetheless, only five OECD DAC donors reached the 0.7 per cent of gross national income target.
ODA continues to provide essential financial and technical cooperation to many developing countries, including least developed coun¬tries and many African countries, landlocked developing countries, Small Island developing States, and countries affected by conflict. In most countries with government spending of less than PPP$ 500 per person per year, ODA accounts for an average of more than two thirds of international resource flows, and about one third of government revenues.33 About 40 per cent of ODA currently ben¬efits least developed countries.34 However, ODA to least developed countries, particularly in sub-Saharan Africa, has fallen in recent years, and according to preliminary results from donor surveys this trend is likely to persist. The Leading Group on Innovative Financing for Development has pio¬neered on a voluntary basis a number of fundraising mechanisms to raise addi¬tional resources, including the international solidarity levy on air tickets, funds from which are contributed to UNITAID to help purchase drugs for devel¬oping countries. Eleven countries using the euro currency are currently envision¬ing a financial transaction tax from 2016, albeit without earmarking funds for development or financing of global public goods as of yet. Some countries (e.g., France) have, at the national level, put in place a financial transaction tax, with part of the proceeds used to finance ODA programmes. There has also been a proliferation of sustainable development-related inter¬national funds and delivery channels. These include global sector funds, premised on multi-stakeholder partnerships that bring together Governments, private sec¬tor, civil society, as well as traditional and emerging donors, such as the Global Fund to Fight AIDS, Tuberculosis and Malaria, the GAVI Alliance, and the Global Partnership for Education. Only 10 years ago, multilateral climate finance was provided by a small number of large funds, which were associated with the United Nations Frame¬work Convention on Climate Change. There are now over 50 international public funds. Over this period, Governments designed and reformed institutions such as the Global Environment Facility (GEF), the Adaptation Fund, the Climate Investment Funds, and most recently the Green Climate Fund, and new evolving financial instruments such as performance-based payments for reducing emis¬sions from deforestation, degradation and forest conservation. Nonetheless, there remains a large gap between climate finance needs and resources. In particular, progress towards implementing the financial commitments under the United Nations Framework Convention on Climate Change has been slow.

3.1 Emerging patterns of resource flows
Despite large needs, the emerging patterns of resource flows highlight the oppor-tunities for mobilizing financing needed to support the achievement of sustain¬able development. Global savings remain robust, at about $22 trillion a year (inclusive of public and private sources), despite a temporary decline due to the crisis.15 The stock of global financial assets — a placement for only a small portion of annual global savings — is estimated to be about $218 trillion. Even a small shift in the way resources are allocated would have an enormous impact. All four types of finance — public and private, domestic and interna¬tional — have increased since 2002. Domestic finance has grown rapidly in recent years, representing by far the greatest share of financing sources for most coun¬tries. In many developing countries, particularly in least developed countries, public international finance remains crucial.16
International financial flows to developing countries increased rapidly over the last decade, mainly driven by growth in private capital flows and remittances, though official development assistance (ODA).
3.2 Public domestic resource mobilization
Public domestic finance in developing countries more than doubled between 2002 and 2011, increasing from $838 billion to $1.86 trillion. In absolute terms, this growth for the most part reflects developments in middle-income coun¬tries. Domestic public finance also doubled in low-income countries, although it remains insufficient to meet sustainable development needs. Tax revenues account for about 10-14 per cent of GDP in low-income countries, which is about one third less than in middle-income countries, and significantly less than in high-income countries, which achieve tax to GDP ratios of 20-30 per cent.18
In many countries, tax evasion and avoidance hinder domestic resource mobilization. In addition, illicit financial outflows, including tax evasion across borders, have undermined tax collection. Estimates of illicit financial flows, by nature clandestine, vary widely, but point to substantial numbers. Domestic public resources are also impacted by subsidies. For example, in 2011 pre-tax energy subsidies amounted to $480 billion, primarily in develop¬ing countries, and post-tax energy subsidies amounted to $1.9 trillion, primarily in developed countries.20 similarly, in agriculture, producer support subsidies among OECD members total $259 billion in 2012. Eliminating these would allow public resources to be redirected to other priorities. In all subsidy deci¬sions, however, any adverse impacts on the poor and the environment need to be addressed, either through appropriate compensating policies or through better targeting. There has been considerable change in the landscape of sovereign debt of developing countries since the Millennium Declaration. External debt amounted to 22.6 per cent of GDP in developing countries in 2013, as compared to 33.5 per cent a decade earlier. The debt difficulties of heavily indebted poor countries (HIPCs) have largely been addressed under the terms of the HIPC Initiative and the Multilateral Debt Relief Initiative.

2.2 Policy Choices in Finance: Government’s Role in Making Finance Work

Although finance thrives on market discipline and fails to contribute to development process effectively in the presence of interventionist policies, governments do have a very important role to play in promoting well-functioning financial systems.
Political and Macroeconomic Environment
Even if historical factors are favorable to financial development, political turmoil may lead to macroeconomic instability and deterioration in business conditions.4 Civil strife and war destroys capital and infrastructure, and expropriations may follow military takeovers. Corruption and crime thrive in such environments, increasing cost of doing business and creating uncertainty about property rights. Detragiache, Gupta and Tressel (2005) show that for low income countries political instability and corruption have a detrimental effect on financial development. Investigating the business environment for 80 countries using firm level survey data, Ayyagari, Demirguc-Kunt and Maksimovic (2005) find that political instability and crime are important obstacles to firm growth, particularly in African and Transition countries. Further, Beck,
Demirguc-Kunt and Maksimovic (2005) show that the negative impact of corruption on firm growth is most pronounced for smaller firms. Given a stable political system, well functioning financial systems also require fiscal discipline and stable macroeconomic policies on the part of governments. Monetary and fiscal policies affect the taxation.
Legal and Information Infrastructure
Financial systems also require developed legal and information infrastructures to function well. Firms’ ability to raise external finance in the formal financial system is quite limited if the rights of outside investors are not protected. Outside investors are reluctant to invest in companies if they will not be able to exert corporate governance and protect their investment from controlling shareholders/owners or the management of the companies. Thus, protection of property rights and effective enforcement of contracts are critical elements in financial system development. Empirical evidence shows firms are able to access external finance in countries where legal enforcement is stronger (La Porta et al., 1997; Demirguc-Kunt and Maksimovic, 1998; Beck, Demirguc-Kunt and Maksimovic, 2005), and that better creditor protection increases credit to the private sector (Djankov, McLiesh and Shleifer, 2007). More effective legal systems allow more flexible and adaptable conflict resolution, increasing firms’ access to finance (Djankov et al., 2007; Beck, Demirguc-Kunt and Levine, 2005). In countries where legal systems are more effective, financial systems have lower interest rate spreads and are more efficient (Demirguc-Kunt, Laeven and Levine, 2004). Timely availability of good quality information is equally important, since this helps reduce information asymmetries between borrowers and lenders.

1.2 Finance and Economic Development: Evidence
By now there is an ever-expanding body of evidence that suggests countries with better developed financial systems experience faster economic growth (Levine, 1997 and 2005). More recent evidence also suggests financial development not only promotes growth, but also improves the distribution of income. The following sections provide a brief review of this literature and its findings, also discussing the main criticisms, namely issues of identification, problems associated with measurement and nonlinearities, as well as potential counterexamples and outliers.
1.3 Concepts of Finance, Economic Growth and Development

According to Governor of Central Bank of Nigeria (CBN): Sanusi Lamido (2011:1) generally, the financial system is more than just institutions that facilitate payments and extend credit but includes all functions that direct real resources to their ultimate user. It is called the central nervous system of a market economy and contains a number of separate codependent components which are essential for effective and efficient functioning of the system. The three major components are:
(a) financial intermediaries such as banks and insurance companies acting as principal agents for assuming liabilities and acquiring claims;
(b) the markets in which financial assets are exchanged, and
(c) the infrastructural component, which is necessary for the effective interaction of intermediaries and markets.
CHAPTER TWO
LINKAGES AND INTER-LINKAGES BETWEEN FINANCE AND DEVELOPMENT
Finance is at the core of the development process. Backed by solid empirical evidence, development practitioners are becoming increasingly convinced that efficient, well-functioning financial systems are crucial in channeling funds to the most productive uses and in allocating risks to those who can best bear them, thus boosting economic growth, improving opportunities and income distribution, and reducing poverty. Conversely, to the extent that access to finance and the available range of services are limited, the benefit of financial development is likely to elude many individuals and enterprises, leaving much of the population in absolute poverty. This access dimension of financial development is the focus of this report. Improving access and building inclusive financial systems is a goal that is relevant to economies at all levels of development. The challenge of better access means making financial services available to all, thereby spreading equality of opportunity and tapping the full potential in an economy. The challenge is greater than ensuring that as many people as possible have access to basic financial services. It is just as much about enhancing the quality and reach of credit, savings, payments, insurance, and other risk management products in order to facilitate sustained growth and productivity, especially for small and medium scale enterprises. Although the formal financial sector in a few countries has achieved essentially universal coverage of the population, at least for basic services, some financial exclusion persists even in many high-income countries (and, because they find it difficult to participate fully in those sophisticated economies, financial exclusion can be an even more serious handicap for those affected).

CHAPTER ONE

Concept of finance and development using global and domestic stylized facts

Introduction

Nigeria is one of the developing countries in Africa and the most populous African country with high population of about 140 million people representing about 20% of the entire African population. The country is also one of the world’s top eight producers of crude oil but, despite this, the country has low level of economic development. The position of the country makes it somehow necessary to examine the reasons for the low growth rate within the economy despite Nigeria’s natural wealth. Financial indicators are just one of the many potential determinants of economic growth and various studies in Africa and worldwide have confirmed relationship between financial sector development and economic growth. Kehinde and Adejuwon (2011:323) examined the importance of financial institutions to the economic development of Nigeria. According to Kehinde and Adejuwon (2011:325) the recognition of financial systems important role in economic development dated back to Schumpeter (1911), Goldsmith (1955), Cameron (1967),
McKinnon (1973) Shaw (1973), Fry, (1988) and King and Levine, (1993), enumerated by Kehinde and Adejuwon 2011) which demonstrated that the financial sector could be a catalyst of economic growth if it is developed and healthy.
Finance is At The Core Of The Development Process backed by solid empirical evidence, development practitioners are becoming increasingly convinced that efficient, well-functioning financial systems are crucial in channeling funds to the most productive uses and in allocating risks to those who can best bear them, thus boosting economic

CHAPTER ONE
1.1 INTRODUCTION
Development had been a major topic that is reoccurring in every programme of the government and any other international organizations. Deliberations on how to ensure sustainable growth in the economic as well as equitable distribution of resources in the economy had been a major concern in the 20th and 21th century. Given the high level of poverty among the masses, the government and various nongovernmental organizations (NGOs) are endeavouring to bring out policies, efficient policies that will help in the eradication of poverty in the society as a whole.
Development is about the all-round wellbeing of the society both socially, academically, psychologically and health wise. However, we cannot talk about development and neglect finance. This is because finances will be required for the purchase or establishment of facilities that will ensure the alleviation of poverty. The building of schools and other infrastructural facilities will require adequate funding. In order to ensure sustainable production and consumption in the economy, funds will be made available for potential investors with sound entrepreneurial ideas to borrow and invest at a very low interest rate. Effective development requires finances even if the development project or programme is run by the government or a nongovernmental organization, therefore, this work will focus on the concept of finance with respect to development. By the end of this research work, we will understand the sources of government funds for developmental projects and the role of nongovernmental organization in development.

countries. When working with these goals, development financing plays a far more important role than in the previous work on the Millennium Development Goals.
New actors – both private and public
Financing for development is one of the most important UN approaches to support poor countries' financing of their development and the fight against poverty. The idea is to identify and coordinate new actors that can contribute to development both financially and with their expertise and competence. In order to reach the enormous sums that are required for a truly sustainable development, both private and public capital flows, other than official development assistance, must be involved. We need to engage actors such as banks, insurance companies and private donors while also working to develop tax systems in developing countries, which in many ways represent a huge potential resource.
Official development assistance (ODA) remains the basis for the financing of development cooperation with development financing as a supplement. Sweden is working for all rich countries to live up to the agreement to designate at least 0.7 per cent of their gross national income (GNI) to development cooperation. At present, only a few countries meet this goal, among them Sweden. When traditional aid is combined with development financing there is an increase in total resources and also the probability of eradicating poverty.
In several countries, including Germany, the UK and the Netherlands, financing for development is gradually being integrated into development cooperation. The supranational organization OECD as well as private and philanthropic actors have also begun working with development financing.

CHAPTER TWO
LINKAGES AND INTER-LINKAGES BETWEEN FINANCE AND DEVELOPMENT
High rates of investment and savings do not always translate into high rates of growth. Countries with similar levels of capital investment can have widely diverse growth experiences.
Levine cited three important studies by King and Levine that are credited with the first broad cross-country test of the relationship between finance and growth. They analyzed 80 countries over the period 1960-1989 and used four different measures of financial development. They are ratio of liquid liabilities of the financial system to gross domestic product (GDP), share of domestic credit allocated by banks, ratio of credit to private enterprises to total domestic credit, and credit to private enterprise divided by GDP. The beginning-of-decade measures of these variables were found to be strongly related to countries’ economic growth, capital accumulation, and productivity growth over the subsequent decade, after controlling for income, education, political stability, and monetary, trade and fiscal policy.
Many recent studies have tested the relationship between finance and growth so that analysis has begun to catch up with policy making. Levine concluded in his 1997 review that the preponderance of the theoretical and empirical evidence suggests a positive relationship between financial development and economic growth. More recently, Wachtel (2001) arrived at the same conclusion. He noted that the efficiency-enhancing aspect of financial sector development has more impact than its effect on the amount of investment.
The question of the relation between sources of growth and financial intermediary development has been explored. Beck, Levine and Loayza (2000) used data for 63

2. To reduce Income Inequality: One of the major objectives of government is to reduce inequality in the distribution of income and wealth. In order to achieve this objective, the government imposes a progressive tax to reduce disparity in income and wealth between the rich and the poor people.
3. To maintain Economic Stability: Economic stability refers to stable price structure, the desired amount of savings and investment, absence of stock and shortage of goods etc. These are necessary conditions for rapid and sustainable economic development of a nation.
4. To increase agriculture and Industrial Production: Increase in production of agricultural and industrial goods and services depend on the fiscal policy followed by the government. If a public authority implements subsidized tax policy, stable fiscal policy and business-friendly policies in the field of agriculture, trade, commerce and industry.
5. To reduce Income Inequality: One of the major objectives of government is to reduce inequality in the distribution of income and wealth. In order to achieve this objective, the government imposes a progressive tax to reduce disparity in income and wealth between the rich and the poor people.

6. To accelerate the course of Economic Development: Development of social and economic infrastructure is the most important responsibility of a government. Therefore, it needs large funds to spend in the construction of social infrastructure such as schools, colleges, universities, drinking water projects etc.

CHAPTER TWO
LINKAGES AND INTER-LINKAGES BETWEEN FINANCE AND DEVELOPMENT
High rates of investment and savings do not always translate into high rates of growth. Countries with similar levels of capital investment can have widely diverse growth experiences.
Levine cited three important studies by King and Levine that are credited with the first broad cross-country test of the relationship between finance and growth. They analyzed 80 countries over the period 1960-1989 and used four different measures of financial development. They are ratio of liquid liabilities of the financial system to gross domestic product (GDP), share of domestic credit allocated by banks, ratio of credit to private enterprises to total domestic credit, and credit to private enterprise divided by GDP. The beginning-of-decade measures of these variables were found to be strongly related to countries’ economic growth, capital accumulation, and productivity growth over the subsequent decade, after controlling for income, education, political stability, and monetary, trade and fiscal policy.
Many recent studies have tested the relationship between finance and growth so that analysis has begun to catch up with policy making. Levine concluded in his 1997 review that the preponderance of the theoretical and empirical evidence suggests a positive relationship between financial development and economic growth. More recently, Wachtel (2001) arrived at the same conclusion. He noted that the efficiency-enhancing aspect of financial sector development has more impact than its effect on the amount of investment.
The question of the relation between sources of growth and financial intermediary development has been explored. Beck, Levine and Loayza (2000) used data for 63 countries over the period 1960-1995 to test how finance affected real per capita GDP growth, real per capita capital stock growth, growth in total factor productivity, and private savings rates. The financial variable was defined as private credit measured as the value of credit by financial intermediaries to the private sector divided by GDP. This measure excludes credit by central and development banks, which were included in some other studies. They hoped this measure would better capture the ability of intermediaries to research and identify profitable ventures, monitor and control managers, ease risk management, and facilitate resource mobilization. They concluded that financial intermediary development produced faster rates of economic growth and total factor productivity growth, but the results were ambiguous for physical capital accumulation or private savings rates. Thus they interpreted their results as being consistent with the Schumpeterian view that financial intermediaries affect economic development primarily by influencing total factor productivity growth rather than through increased savings or growth in the capital stock.

CONCLUSION
NGOs hold a great promise to provide self-help solutions to problems of poverty and powerlessness in many Third World societies. They are increasingly making up for the shortcomings of the state and market in reducing poverty in Third World countries. Furthermore, their future role in development is expected to increase precisely because of favourable international donor support. In fact, since the launching of the Structural Adjustment Participatory Review Initiative (SAPRI) in 1997, NGOs are increasingly influencing economic and social development policy in Third World countries. SAPRI provides a framework for joint evaluation of economic reform by the World Bank, Third World governments, and one thousand civil society organizations including NGOs. But despite their growing role and expected contribution to Third World development,
Conclusively, NGOs should neither be considered a panacea nor the "magic bullet" for solving the problems of development.
REFERENCES
Bebbington, A., Hickey, S., & Mitlin, D. (2008). Introduction: CanNGOs make a difference?: The challenge of development alternatives.In A. Bebbington, S. Hickey, & D. Mitlin (Eds.), Chap. 1 in Can NGOs make a difference?: The challenge of development alternatives (pp. 3–37). London: Zed Books.
Clark, J. (1991). Democratising development: The role of voluntary organizations London: Earthscan.
Fowler, A. (1997). Striking a balance: A guide to enhancing the effectiveness
of NGOs in international development. London: Earthscan.
Hilhorst, D. (2003). The real world of NGOs: Discourses, diversity and
development. London: Zed Books.
Howell, J., & Pearce, J. (2001). Civil society and development: A critical Au4
exploration. Boulder, CO: Lynne Rienner.

In fact, some NGOs seek to organize and involve the marginalized groups in their own development. And sometimes, they try to link their clients to the powerful segments of society by providing access to resources that are normally out of reach to the poor. For example, within development-oriented NGOs, microfinance institutions (MFIs) try to contribute to the economic improvement of the poor by: "bringing in new income from outside the community, preventing income from leaving the community, providing new [self] employment opportunities and stimulating backward and forward linkages to other community enterprises."
Most development-oriented NGOs in the Third World use new and innovative development strategies such as the "minimalist cost effective approach (favoured by microfinance institutions/poverty lending programs), "assisted self-reliance" or "participatory development." Overall, NGOs appear well suited to adapt the use of such innovative strategies because of their small-scale of operations, flexibility and great capacity to mobilize resources and to organize people to solve their own problems. The new development strategies perceive people as active participants of their own development. These "bottom-up" development strategies stand in sharp contrast to the "top down" capitalist and state socialist models of development.

Finance is a field that is concerned with the allocation (investment) of assets and liabilities (known as elements of the balance statement) over space and time, often under conditions of risk or uncertainty. Finance can also be defined as the science of money management. Market participants aim to price assets based on their risk level, fundamental value, and their expected rate of return. Finance can be broken into three sub-categories: public finance, corporate finance and personal finance. Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to goods and services. Financial concentrates on influences of real economic variables on financial ones, in contrast to pure finance. It centres on managing risk in the context of the financial markets, and the resultant on financial models. It essentially explores how rational investors would apply risk and return to the problem of an investment policy. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), ; it further studies phenomena and models where these assumptions do not hold, or are extended. "Financia", at least formally, also considers investment under "certainty" and hence also contributes to corporate finance theory. The “economy” is a social institution that organizes a society’s production, distribution, and consumption of goods and services, all of which must be financed.

CHAPTER ONE
CONCEPTS OF FINANCE AND DEVELOPMENT USING STYLIZED FACTS

Definition of terms
Financial development is part of the private sector development strategy to stimulate economic growth and reduce poverty. Overcoming “costs” incurred in the financial system. This process of reducing costs of acquiring information, enforcing contracts, and executing transactions results in the emergence of financial contracts, intermediaries, and markets. Different types and combinations of information, transaction, and enforcement costs in conjunction with different regulatory, legal and tax systems have motivated distinct forms of contracts, intermediaries and markets across countries in different times.
Economic development is the process by which a nation improves the economic, political, and social well-being of its people. The term has been used frequently by economists, politicians, and others in the 20th and 21st centuries. The concept, however, has been in existence in the West for centuries. "Modernization, "westernization", and especially "industrialization" are other terms often used while discussing economic development. Economic development has a direct relationship with the environment and environmental issues. Economic development is very often confused with industrial development, even in some academic sources

The absence of viable states or markets in most Third World countries including African states has left NGOs as the most important alternative for promoting economic development. Thus, the failure or inability of both states and markets to meet the basic needs of the majority of the people in the Third World has given rise to the growing importance of the NGO sector in the development process. Such inability has also exposed the inherent limitations of the state or private sector as major agents of promoting economic development in the Third World.
NGOS AS AN ALTERNATIVE APPROACH TO DEVELOPMENT IN THE THIRD WORLD
The rapid growth and expansion of NGOs worldwide attest to their growing critical role in the development process. At the international level, NGOs are perceived as vehicles for providing democratization and economic growth in Third World countries. Within Third World countries, NGOs are increasingly considered good substitutes for weak states and markets in the promotion of economic development and the provision of basic services to most people.
NGOs are seen by their proponents as a catalyst for societal change because they are responsive to the needs and problems of their clients, usually the poor, women and children. Because of targeting and being responsive to marginalized groups in society, NGOs are being heralded as "important vehicles for empowerment, democratization and economic development." In fact, some NGOs are "driven by strong values and interests, geared toward empowering communities that have been traditionally disempowered." International donor agencies see NGOs as "having the capacity and commitment to make up for the shortcomings of the state and market in reducing poverty."

As a result, donor agencies now favour new and innovative development strategies such as the "minimalist cost-effective approach" (used by microfinance institutions), "assisted self-reliance" or "participatory development." NGOs appear well suited to adapt the use of new and innovative strategies because of their small scale, flexibility and wide-ranging capacity to mobilize resources and to organize people to solve their own problems. The new development strategies, which are considered to be "people-friendly" engage grassroots energies, resources and talents and perceive people as active participants of their own development. Finally, the objectives of the new development models can be achieved much more cost-effectively through NGOs.
This is primarily because NGOs tend to be flexible vehicles for meeting a variety of human needs including: self-expression or empowerment, promoting equity, self-help, participation and mutual assistance. Increasingly, donors believe that many of their aid priorities in the post-debt and post-Cold War era can be effectively implemented through a variety of NGOs found in virtually all Third World countries. The aid priorities of the international donor community include: " . . . developing the private sector, alleviating poverty, encouraging more equitable income distribution, supporting women, and promoting participatory development approaches and modalities that stress individual action and collective initiatives."
FAILURE OF ECONOMIC DEVELOPMENT IN THE THIRD WORLD AND NGO GROWTH
As noted in the previous section, donor agencies increasingly support NGOs in providing services to the poor in Third World countries where markets are inaccessible and where governments lack capacity or resources to reach the poor. In most Third World countries including those in Africa, both states and markets are weak or in decline. In Africa, the persistence of the dual crises of weak states and nascent or declining markets pose a classic dilemma for proponents of either market- or state-led economic development. The failure of both markets and governments in Africa to deliver economic development has contributed to the rapid growth and expansion of NGOs on the continent.

IMPACT OF NGOs IN ECONOMIC DEVELOPMENT
The phenomenal growth of nongovernmental organizations (NGOs) at both international and national levels is due to the changing attitude of donor agencies about development assistance and the increased demand for NGO services in Third World countries.
1. NGOs are non-membership support organizations involved in relief, rehabilitation, or community development work in developed and, especially, developing or Third World countries.
2. Considered part of the civil arena in society which also includes trade unions, people's associations and membership organizations, cooperatives and religious-based charities, NGOs provide a third approach to development between market-led and state-led strategies.
3. In the post-Cold War era, governments in Third World countries are experiencing a steady decline in both fiscal support and public credibility.
4. On the other hand, markets globally are on the ascent in terms of ideological and resource support, while those in the Third World are still nascent or in decline.
THE CHANGING ATTITUDE OF THE INTERNATIONAL DONOR COMMUNITY AND NGO GROWTH
The phenomenal growth of NGOs on the world scene has been aptly described as "a global associational revolution."7 The number of development– oriented NGOs registered in countries of the industrialized North "grew from 1,600 in 1980 to 2,970 in 1993". It is also reported that "over the same period, the total spending of these NGOs rose from US$2.8 billion to US$5.7 billion in current price.
The growth of the NGOs on the global scene is associated with the changing attitude of the international donor community about development assistance. Such a change of attitude has been influenced by the end of the Cold War, the dwindling development aid from leading industrialized countries, and a new emphasis on targeting aid to benefit marginalized segments of society.
With the end of the Cold War, "development policy and aid transfers have come to be dominated by a new policy agenda. Such a policy agenda "is driven by . . . liberal economics and liberal democratic theory." Also, recent developments in economic and political thinking about roles of markets and states in promoting economic development have been heavily influenced by neoliberal economic and democratic theory. As a result of such thinking, markets and private sector initiatives are considered the most efficient mechanisms for achieving economic growth and providing most services, including social services (via privatization) to most people. In contrast, governments whose role within the economy is being reduced, are expected to create an "enabling environment" or a legal and policy framework for the private sector provision of goods and services.

iii. Participatory orientation is characterized by self-help projects where local people are involved particularly in the implementation of a project by contributing cash, tools, land, materials, labour etc. In the classical community development project, participation begins with the need definition and continues into the planning and implementation stages.
iv. Empowering orientation aims to help poor people develop a clearer understanding of the social, political and economic factors affecting their lives, and to strengthen their awareness of their own potential power to control their lives. There is maximum involvement of the beneficiaries with NGOs acting as facilitators.
CLASSIFICATION BY LEVEL OF OPERATION
i. Community-based organizations (CBOs) arise out of people's own initiatives. They can be responsible for raising the consciousness of the urban poor, helping them to understand their rights in accessing needed services, and providing such services.
ii. City-wide organizations include organizations such as chambers of commerce and industry, coalitions of business, ethnic or educational groups, and associations of community organizations.
iii. State NGOs include state-level organizations, associations and groups. Some state NGOs also work under the guidance of National and International NGOs.
iv. National NGOs include national organizations such as the YMCAs/YWCAs, Bachpan Bachao Andolan, professional associations and similar groups. Some have state and city branches and assist local NGOs.
v. International NGOs range from secular agencies such as Save the Children, SOS Children's Villages, OXFAM, Ford Foundation, Global march against child labour, and Rockefeller Foundation to religiously motivated groups. They can be responsible for funding local NGOs, institutions and projects and implementing projects.
Non-governmental organizations can be referred as third-sector organization (TSO), non-profit organization (NPO), voluntary organization (VO), civil society organization (CSO), grassroots organization (GO), social movement organization (SMO), private voluntary organization (PVO), self-help organization (SHO) and non-state actors (NSAs).
Four main family groups of NGOs can be found worldwide and they are:
• Unincorporated and voluntary association
• Trusts, charities, and foundations
• Companies not just for profit
• Entities formed or registered under special NGO or non-profit laws
The Council of Europe in Strasbourg drafted the European Convention on the Recognition of the Legal Personality of International Non-Governmental Organizations in 1986, which sets a common legal basis for the existence and work of NGOs in Europe. Article 11 of the European Convention on Human Rights protects the right to freedom of association, which is also a fundamental norm for NGOs.

The number of NGOs worldwide is estimated to be 10 million. Russia had about 277,000 NGOs in 2008. India is estimated to have had around 2 million NGOs in 2009, just over one NGO per 600 Indians, and many times the number of primary schools and primary health centres in India. China is estimated to have approximately 440,000 officially registered NGOs. About 1.5 million domestic and foreign NGOs operated in the United States in 2017.
CHARACTERISTICS OF NON-GOVERNMENTAL ORGANIZATIONS
Their characteristics or roles can be broadly classified under three viz:
1. NGOs act as implementers in that they mobilize resources in order to provide goods and services to people who are suffering due to a man-made disaster or a natural disaster.
2. NGOs act as catalysts in that they drive change and they have the ability to inspire, facilitate, or contribute to improved thinking and action to promote change.
3. NGOs often act as partners alongside other organizations in order to tackle problems and address human needs more effectively.
Other characteristics include:
4. They are non-profit institutions and thus are not hindered by short-term financial objectives.
5. They devote themselves to issues which occur across longer time horizons, such as climate change, malaria prevention, or a global ban on landmines.
6. NGOs often enjoy a high degree of public trust, which can make them a useful – but not always sufficient – proxy for the concerns of society and stakeholders.
4. They improve the state of the natural environment, encourage the observance of human rights, improve the welfare of the disadvantaged, or represent a corporate agenda.
CLASSIFICATION OF NGOs
They are classified under the following:
1. By orientation
2. By level of operation
CLASSIFICATION BY ORIENTATION
i. Charitable orientation often involves a top-down paternalistic effort with little participation by the "beneficiaries". It includes NGOs with activities directed toward meeting the needs of the poor people.
ii. Service orientation includes NGOs with activities such as the provision of health, family planning or education services in which the programme is designed by the NGO and people are expected to participate in its implementation and in receiving the service.

If income rises, too, along with output capacity and debt, the pres- sure on interest rates is even more emphatic. The rise in income intensifies the transactions demand for liquid balances. If steady growth in output requires stability in interest rates and other terms of lending, monetary policy must induce expansion in the money supply to satisfy the diversification and transactions demands far money that result from rising debt and rising income. The banking system must be permitted to grow so that the portfolios of surplus units will not be oversupplied with bonds and undersupplied with money.
How fast the money supply must rise, to stabilize terms of lending when income is rising, depends partly on the rate of increase in income. Evidently the money supply must keep in step with demand for money balances. The diversification demand depends on the stock of debt, which falls in proportion to income the more rapidly income gains. While the diversification demand may become smaller in proportion to income, as the pace of growth in income increases, the transaction demand may grow proportionally with income. The sum of these demands,

REFERENCES
Allen, F., Qian, J. and Qian, M. (2005). Law, finance, and economic growth in China, Journal of Financial Economics, 77(1), 57-116.
Armendariz de Aghion, B. and Morduch, J. (2005). The Economics of Microfinance. Cambridge, MA: MIT Press.
Beck, T., Demirgüç-Kunt, A. and Levine, R. (2007). Finance, inequality and the poor, Journal of Economic Growth, 12(1), 27-49.

Keynesian dogma, the rate of interest does depend on past flows of loanable funds though it does not depend on current flows. Past flows have left the heritage of a stock of direct debt or bonds. The distribution of past flows between direct channels of finance and one indirect channel, the monetary system, has affected the allocation of bonds between spending units and the monetary system, and as a result, the proportion of bonds to money in the portfolios of spending units. Though the stock of bonds cannot rise in the Keynesian short period, the historic distribution of bonds can be changed, according to the dic- tates of monetary policy, by monetary techniques. The function of monetary techniques is, in fact, to transfer bonds between the banking system and spending units and, if fortune smiles upon the authorities, to change in the desired direction the marginal rate of preference by
spending units for bonds against money. To the degree that bonds are held by banks, spending units hold money created by the banks.
An ample supply of money implies in the Keynesian model that the taste for liquidity is relatively sated." With bonds in short supply to spending units, the taste for interest is rela tively unsated, and the price of bonds in terms of money is high. If bonds are held not by banks but by the public, money and liquidity are in short supply. Then the taste for interest income is relatively sated, bond prices are low in terms of money, and the interest rate is high.
Given factors that affect the intensity of demand for liquidity and money-income, speculative anticipations, and precautionary needs- the price of bonds depends on where bonds are, whether in the port- folios of banks or in the portfolios of spending units. In static equilib- rium, the distribution of bonds must yield that rate of interest at which, given the level of income, ex-ante surpluses and deficits are equal and spending units are content with the division of their financial assets between bonds and money.
This Keynesian model is inappropriate to financial aspects of growth analysis for two reasons which are:
 It does not permit direct debt to accumulate and affect financial determinants of spending.
 It admits only two kinds of financial asset, money and bonds, on the assumption that the stock though not the location of bonds is fixed.
The model does not accommodate the financial intermediaries whose development in recent decades has diversified indirect finance and marked commercial banking as a relatively declining industry. Simply, the financial aspects of the Keynesian model ignore the long-period accumulation of securities and the secular institutionalization of saving and investment.

C. DEBT ACCUMULATION AND INTEREST RATES.
The Keynesian model may be adapted, first, by extending the time period to permit loanable
funds to flow and debt to accumulate. We may continue to suppose, for the time being, that debt and financial assets consist of bonds and money. The revised model needs to be a dynamic one in which divergent rates of growth in wealth, income, and debt influence the willingness of spending units to incur deficits and debt and to accumulate financial assets.
Suppose, for the moment, a given level of national income and of demand for transactions balances of liquidity."

When intermediaries intervene in the flow of loanable funds, the accumulation of financial assets by surplus spending units continues to equal the accumulation of debt by deficit units. The rise of intermediaries-of institutional savers and investors-does not affect at all the basic equalities in a complete social accounting system between budgetary deficits and surpluses purchases and sales of loanable funds, or accumulation of financial assets and debt. But total debt, including both the direct debt that intermediaries buy and the indirect debt of their own that they issue, rises at a faster pace relative to income and wealth than when finance is either direct or arranged internally. Institutionalization of saving and investment quickens the growth rate of debt relative to the growth rates of income and wealth.

B. COMMERCIAL BANKS AND COMPETITIVE INTERMEDIARIES.
A monetary system, and especially its commercial banking component, has commonly been the first significant financial intermediary to complicate the simplicity of self-finance and direct finance. Even as late as a half- century ago in this country, the commercial banks offered the predominant escape from self-finance and direct finance.
The role of the banks has been, first, to borrow loanable funds from spending units with surpluses, issuing indirect securities in exchange. These securities have been the currency and deposits that spending In terms of definitions in note 3 above: Total expenditures (E) =Total finance (R + D – FA). Then self-finance is R – FA and external finance is D, which may be rewritten as DP to distinguish the debt of spending units from Di, the debt, aside from equity claims, of financial intermediaries. DP is direct debt, while D' is indirect debt.
Financial assets, too, may be classified into FAP, balances in the form of direct debt issued by other spending units, and FA' or balances in the form of nonequity claims on financial intermediaries.
The role of the banks has been, second, to transmit the borrowed funds to spending units with deficits, receiving in ex- change direct securities for their own portfolios. Finally, the banks have exchanged direct securities with spending units that wish to adjust their relative holdings of securities in direct and indirect form. When banks are the only intermediary, surplus spending units may choose to accumulate real wealth, direct securities, or deposits and currency. Deficit spending units may finance themselves by retained earnings, by issues of direct securities to surplus units, or by issues of direct securities to banks. The degree to which debt is absorbed by banks, and, hence, the degree to which financial-asset accumulation is in deposit or currency form expresses the preference of spending units for the asset that is fixed in price (as distinct from value).
Before financial intermediaries other than the monetary system assume importance, monetary theory in the sense of theory about the supplying of and the demand for money relative to the supplying of and demand for direct securities ("bonds") is a perfect balance-sheet counterpart for income theory, saving-investment theory, or surplus-deficit analysis. In so simple a financial system the disposition of surpluses and deficits is accounted for completely by accumulation of direct debt and of indirect debt in money form. Economic theory can appropriately limit its attention to goods, bonds, and money as long as the institutionalization of saving and investment is confined to the monetary system.

4. FOREIGN DIRECT INVESTMENT (FDI)
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control.
As an FDI: the investment may be made either "inorganically" by buying a company in the target country or "organically" by expanding the operations of an existing business in that country.
Foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans". In a narrow sense, foreign direct investment refers just to building new facility, and a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. FDI is the sum of equity capital, long-term capital, and short-term capital as shown in the balance of payments. FDI usually involves participation in management, joint-venture, transfer of technology and expertise. Stock of FDI is the net (i.e., outward FDI minus inward FDI) cumulative FDI for any given period. Direct investment excludes investment through purchase of shares.
FDI, a subset of international factor movements, is characterized by controlling ownership of a business enterprise in one country by an entity based in another country. Foreign direct investment is distinguished from foreign portfolio investment, a passive investment in the securities of another country such as public stocks and bonds, by the element of "control". According to the Financial Times, "Standard definitions of control use the internationally agreed 10 percent threshold of voting shares, but this is a grey area as often a smaller block of shares will give control in widely held companies. Moreover, control of technology, management, even crucial inputs can confer de facto control.
5. DOMESTIC FINANCIAL RESOURCES FOR DEVELOPMENT
Developing countries must mobilize domestic resources for development. National budgets contain potential for savings and redistribution. Governments can make additional resources available for sustainable development by reforming their tax systems and eliminating harmful subsidies and unproductive expenses. Of course, when dictators send billions to secret bank accounts, and when wealthy citizens send their savings overseas, they drain domestic financial resources, undermining the basis for development.

REFERENCES
"Total Household Debt Increases, Delinquency Rates of Several Debt Types Continue Rising – FEDERAL RESERVE BANK of NEW YORK". http://www.newyorkfed.org. Retrieved 12 July 2018.
Richard Parncutt (July 13, 2012). "Global Wealth Tax".
Matt Cover (December 7, 2009). "Pelosi Endorses 'Global' Tax on Stocks, Bonds, and other Financial Transactions". CNSNews.com. Retrieved 13 July 2018.
BBC (August 30, 2009). "Turner defends bank tax comments". BBC. Retrieved 14 July 2018.
The Canadian Press (June 24, 2010). "Flaherty says global bank tax a distraction for G20". CTV news via The Canadian Press. Retrieved 24 June 2010.
UNCTAD (2010). "Foreign direct investment, the transfer and diffusion of technology, and sustainable development (2010)" (PDF).
Slaughter And May (2012). "Legal Regimes Governing Foreign Direct Investment (FDI) In Host Countries" (PDF). Advocates for International Development. Archived from the original (PDF)

4. SME Finance
 Guidelines for N200 Billion SME Credit Guarantee Scheme (SMECGS)
 Guidelines for N200 Billion Refinancing and Restructuring of Banks' Loans to the Manufacturing Sector
5. Small and Medium Enterprises Equity Investment Scheme (SMEEIS)
 Guidelines
6. Refinancing and Rediscounting Scheme (RRF)

SOURCES OF DEVELOPMENT FINANCING
1. GLOBAL TAXES
A world taxation system or global tax is a proposed system for the collection of taxes by a central international revenue service. The idea has garnered currency as a means of compelling institutions to pay, rather than avoid, taxes; it has also aroused the ire of nationalists as an infringement upon national sovereignty.
PROPOSED GLOBAL TAXES
a. Financial Transaction Tax
The financial transaction tax has been supported by a number of economists as both a rectification of jurisdictional discrepancies in taxation. Discussion of a global FTT has increased in the 2000s, especially after the Late-2000s recession.
UN Global Transaction Tax
In 2009, the UN Millennium Development Goals programme was a proposed beneficiary of the Tobin Tax.
According to Dr. Stephen Spratt, "the revenues raised could be used for….international development objectives…such as meeting the [ Millennium Development Goals ]." These are eight international development goals that 192 United Nations member states and at least 23 international organizations have agreed (in 2000) to achieve by the year 2015. They include reducing extreme poverty, reducing child mortality rates, fighting disease epidemics such as AIDS, and developing a global partnership for development.
In 2000, a representative of a “pro Tobin tax” NGO proposed the following: "In the face of increasing income disparity and social inequity, the Tobin Tax represents a rare opportunity to capture the enormous wealth of an untaxed sector and redirect it towards the public good. Conservative estimates show the tax could yield from $150-300 billion annually. The UN estimates that the cost of wiping out the worst forms of poverty and environmental destruction globally would be around $225 billion per year."

EARNINGS
They consist of net revenues from the sale of commodities by public sector undertakings.
Consider, first, manufactured outputs of public sector undertakings. In principle, there should be no net gain to the government from public undertakings, and even a loss in case of increasing returns to scale, if the government prices these commodities at their marginal cost, as is socially desirable. To the extent that price exceeds marginal cost, prices charged are akin to a poll tax on citizens, who are, after all, the ultimate owners of these undertakings. The incidence of this poll tax depends on the importance of the commodities in question in the consumption basket of different groups. While there is largely a consensus on pricing of products of public sector undertakings, there is also a general view that public sector undertakings in most developing countries produce many goods which the private sector could produce more efficiently. Consequently, in many countries an additional temporary source of funds for the government is capital receipts from the privatisation of public enterprises.
GENERAL AND REGULATORY TAXES
General taxes are a residual source of finance that should be resorted to only if other sources of finance are socially inadequate for government resource needs.
Regulatory or Pigouvian taxes are taxes the government should levy on privately provided or privately consumed commodities when there are negative externalities or spillovers which lead to the private cost of provision or consumption being below the social cost. Since the government gets revenue from such taxes while, at the same time bringing private costs of provision or consumption in line with social costs by "making the polluter pay", such taxes have a double benefit.
DEBT
Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.
As the government represents the people, government debt can be seen as an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.
Most government budgets are calculated on a cash basis, meaning that revenues are recognized when collected and outlays are recognized when paid.

REFERENCES
Chisholm, Hugh, ed. (1911). "Revenue". Encyclopædia Britannica (11th ed.). Cambridge University Press.
http://www.wikipedia.org/government-revenue/ Retrieved on 12 July 2018
http://www.wikipedia.org/public-finance/ Retrieved on 12 July 2018-07-18

TAX REVENUES
Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day tax burden. The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.
A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as corvée labor. A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government a payment exacted by legislative authority." A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."
There are various types of taxes, broadly divided into two heads namely direct (which is proportional) and indirect tax (which is differential in nature):
 Stamp duty, levied on documents
 Excise tax (tax levied on production for sale, or sale, of a certain good)
 Sales tax (tax on business transactions, especially the sale of goods and services)
 Value added tax (VAT) is a type of sales tax
 Services taxes on specific services
 Road tax
 Gift tax
 Duties (taxes on importation, levied at customs)
 Corporate income tax on corporations (incorporated entities)
 Wealth tax
 Personal income tax (may be levied on individuals, families such as the Hindu joint family in India, unincorpated associations, etc.)
NON-TAX REVENUES
Non-taxable sources such as government-owned corporations' incomes, central bank revenue
CAPITAL RECEIPTS
Capital receipts in the form of external loans and debts from international financial institutions.

NAME: UWAKWE EKENEDILICHUKWU AMSLEM
REG NO: 2015/201003
DEPT: ECONOMICS

CHAPTER THREE
3.1 DISCUSS GOVERNMENT FINANCING ,ITS SOURCES AND DISCUSS DEVELOPMENT FINANCING OF NIGERIA AND THEIR SOURCES
3.2 GOVERNMENT FINANCING
Government financing is the study of the role of the government in the economy. It is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.The purview of government financing is considered to be threefold: governmental effects on (1) efficient allocation of resources,(2) distribution of income, and (3) macroeconomic stabilization
Government can pay for spending by borrowing (for example, with government bonds), although borrowing is a method of distributing tax burdens through time rather than a replacement for taxes. A deficit is the difference between government spending and revenues. The accumulation of deficits over time is the total public debt. Government financing is closely connected to issues of income distribution and social equity. Governments can reallocate income through transfer payments or by designing tax systems that treat high-income and low-income households differently .
3.2 FINANCING OF GOVERNMENT EXPENDITURE
Government expenditures are financed primarily in three ways:
1.0 Government revenue : Taxes and Non-tax revenue (revenue from government owned corporations, sovereign wealth funds , sales of assets, or seignior age).
2.0 Government borrowing. And 3.0 Money creation.
TAX
Taxation is the central part of modern public finance. The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.
Seignior age
Seignior age is the net revenue derived from the issuing of currency. It arises from the difference between the face value of a coin or bank note and the cost of producing, distributing and eventually retiring it from circulation. Seignior age is an important source of revenue for some national banks, although it provides a very small proportion of revenue for advanced industrial countries.

3.3 SOURCES OF DEVELOPMENT FINANCING
AGRICULTURE
As of 2010, about 30% of Nigerians are employed in agriculture. Agriculture used to be the principal foreign exchange earner of Nigeria.Major crops include beans, sesame, cashew nuts, cassava, cocoa beans, groundnuts, gum Arabic, kola nut, maize (corn), melon, millet, palm kernels, palm oil, plantains, rice, rubber, sorghum, soybeans and yams. Cocoa is the leading non-oil foreign exchange earner. Rubber is the second-largest non-oil foreign exchange earner.Prior to the Nigerian civil war, Nigeria was self-sufficient in food. Agriculture has failed to keep pace with Nigeria's rapid population growth, and Nigeria now relies upon food imports to sustain itself.[113] The Nigerian government promoted the use of inorganic fertilizers in the 1970s.
OIL
Nigeria is the 12th largest producer of petroleum in the world and the 8th largest exporter, and has the 10th largest proven reserves. (The country joined OPEC in 1971). Petroleum plays a large role in the Nigerian economy, accounting for 40% of GDP and 80% of Government earnings. However, agitation for better resource control in the Niger Delta,

NAME: UWAKWE EKENEDILICHUKWU AMSLEM
DEPT: ECONOMICS
LEVEL: 300

CHAPTER ONE
1.1 DISCUSS THE CONCEPT OF FINANCE DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZZED FACTS
1.2 Concept of Development
Some scholars such as Williamson, Buttrick, Water Crouse, Viner etc. define economic development as the process that brings about permanent increase in per capita income. Other scholars like Meier, Baldwin etc. define economic development as the process leading to long-lasting increase in national income instead of per capita income. Bernard, Okun and W. Richardson define economic development as sustained improvement in wellbeing, which is reflected by increasing flow of goods and services. Simon Kuznets defines economic development as a long term rise in the capacity to supply increasing diverse economic goods to its population, the growing capacity based on advancing technology and the institutional and ideological adjustment that demands. TAYEBWA (1992:261) states that development is a broad term which should not be limited to mean economic development, economic welfare or material wellbeing as per Tayebwa, development in general includes improvements in economic, social and political aspects of whole society like security, culture, social activities and political institutions .According to TODARO (1981:56) refers to development as a multi-dimensional process involving the reorganization and reorientation of the entire economic and social systems.According to PERROUX (1978:65), defines development as "the combination of mental and social changes among the population which decide to increase its real and global products, cumulatively and in sustainable manner."ROGERS (1990:30) adds "development is a long participatory process of social change in the society whose objective is the material and social progress for the majority of population through a better understanding of their environment" Dudley Seers while elaborating on the meanicvng of development suggests that while there can be value judgements on what is development and what is not, it should be a universally acceptable aim of development to make for conditions that lead to a realisation of the potentials of human personality.

4.4 FOREIGN DIRECT INVESTMENT
Foreign direct investment (FDI) has increased tenfold over the last 20 years. This kind of investment brings private overseas funds into a country for investments in manufacturing or services (for example, General Motors building an auto factory in the Philippines). FDI can bring impressive growth, as in China's coastal provinces, but also instability and economic distress, as during the 1997-98 Asian financial crisis. Governments of many poor countries see foreign capital as a means of economic growth, and they have taken steps to attract it. These steps often include minimizing business regulation and weakening codes for labor, health, and the environment. Such governments may also try to improve the investment climate by using violence to silence opposition parties and movements. Rich countries, for their part, have sought legal protection for investors, and have used the World Bank and the IMF to impose new arrangements in this field. Bilateral and multilateral agreements, such as the North American Free Trade Area, protect investments at the expense of environmental and health regulations. The proposed Multilateral Investment Agreement (MIA), under negotiation at the WTO, would replicate this imbalance at the global level.
4.5 DOMESTIC FINANCIAL RESOURCES FOR DEVELOPMENT
Developing countries must mobilize domestic resources for development. National budgets contain potential for savings and redistribution. Governments can make additional resources available for sustainable development by reforming their tax systems and eliminating harmful subsidies and unproductive expenses. Of course, when dictators send billions to secret bank accounts, and when wealthy citizens send their savings overseas, they drain domestic financial resources, undermining the basis for development.

CHAPTER 5
CRITICALLY DISCUSS THE CONCEPT OF NON-GOVERNMENT ORGANIZATION AND THEIR IMPACT ON DEVELOPMENT.
5.1 NON-GOVERNMENT ORGANIZATION.
Non-governmental organizations (NGOs) play a significant role in today’s society, typically picking up the government’s deficits in services and social protection for citizens via the philanthropy of donors and the socially aware. Non-governmental organizations commonly referred to as NGOs, are usually non-profit and sometimes international organizations independent of governments and international governmental organizations (though often funded by governments) that are active in humanitarian, educational, health care, public policy, social, human rights, environmental, and other areas to effect changes according to their objectives.
NGOs are non-profit organizations independent of state and international governmental organizations; are usually funded by donations and may rely heavily on volunteers for their operation. Highly diverse, NGOs are engaged in a wide range of activities and take different forms globally. They are thus a subgroup of all organizations founded by citizens, which include clubs and other associations that provide services, benefits, and premises only to members.
The explanation of the term by NGO.org (the non-governmental organizations associated with the United Nations) is ambivalent. It first says an NGO is any non-profit, voluntary citizens' group which is organized on a local, national or international level, but then goes on to restrict the meaning in the sense used by most English speakers and the media: Task-oriented and driven by people with a common interest, NGOs perform a variety of service and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information.

3.3 DEVELOPMENT FINANCING
Development financing is the efforts of local communities to support, encourage and catalyze expansion through public and private investment in physical development, redevelopment and/or business and industry. It is the act of contributing to a project or deal that causes that project or deal to materialize in a manner that benefits the long-term health of the community.
Development financing requires programs and solutions to challenges that the local business, industry, real estate and environment creates. For, examples, we need unique financing approaches to address environmentally contaminated land and specific solutions to unlocking capital access in underserved markets and industries. Each of the problems that we seek to solve in development require unique and targeted solutions. Ultimately, development finance aims to establish proactive approaches that leverage public resources to solve the needs of business, industry, developers and investors.
Development financing is one of the requirements for sustainable economic growth in any economy. The supply of finance to various sectors of the economy will promote the growth of the economy in a holistic manner and this, will make development, welfare improvement to proceed at a faster rate. The Central Bank of Nigeria development finance initiatives involve the formulation and implementation of various policies, innovation of appropriate products and creation of enabling environment for financial institutions to deliver services in an effective, efficient and sustainable manner. The initiatives are mainly targeted at agricultural sector, rural development and micro, small and medium enterprises.
3.4 ITS SOURCES
Charges and fees: are levied for publicly provided commodities (i.e. goods and services) which are not (pure or nearly pure) public goods. It is efficient – or a least cost social option – for socially desirable commodities to be provided publicly if either the private sector would have underprovided them or if it can provide them only at a greater social resource cost than the government.
Seignorage and Debt: These are actually very different sources of finance. Seignorage is the purchasing power transferred to the government by the private sector when and if it provides money which serves as a medium of exchange for the economy
Regulatory taxes: Regulatory or "Pigouvian" taxes are taxes the government should levy on privately provided or privately consumed commodities when there are negative externalities or spillovers which lead to the private cost of provision or consumption being below the social cost. Since the government gets revenue from such taxes while, at the same time bringing private costs of provision or consumption in line with social costs by "making the polluter pay", such taxes have a double benefit.

CHAPTER THREE
DISCUSS GOVERNMENT FINANCING, ITS SOURCES AND DISCUSS DEVELOPMENT FINANCING IN NIGERIA AND THEIR SOURCES.
3.1 GOVERNMENT FINANCING
Government financing is the role of the government in the economy. It is that branch of economics which is concerned with the income and expenditure of public authorities and its effect upon the economy in general. When the classical economists wrote upon the subject of public finance, they concentrated upon the income side, taxation. since the keynesian era of the 1930s, much more emphasis has been given to the expenditure side and the effect that fiscal policy has on the economy.
The public sector is so large a part of most economies that it influences virtually every aspect of economic life, either through its own expenditure on goods and service provided by the private sector, its wage payments to public-sector employees, or its social security payments (pensions, sickness and unemployment benefits). Similarly, the financing of these expenditures by means of various taxes (income tax, value-added tax, corporation tax, etc.) affects the size and pattern of spending by individuals and businesses.
Governments plan their revenue and expenditure each fiscal year by preparing a budget They may plan to match their expenditure with their revenue, aiming for a balanced budget; or they may plan to spend less than they raise in taxation, running a budget surplus and using this surplus to repay former public debts or they may plan to spend more than they raise in taxation, running a budget deficit that has to be financed by borrowing, as well as serving as the instrument of government planning of its own economic and social commitments, the budget plays an integral role in the application of fiscal policy, specifically the operation of demand management policies to reduce unemployment and inflation.
3.2 ITS SOURCES
Tax:
A tax is a compulsory levy imposed by a public authority against which tax payers cannot claim anything. It is not imposed as a penalty for only legal offence. The essence of a tax, as distinguished from other charges by the government, is the absence of a direct quid pro quo (i.e., exchange of favour) between the tax payer and the public authority.
Tax has three important features:
i. It is a compulsory contribution, to the state from the citizen. Anyone refusing to pay tax is punished under law. Nobody can object to taxation on the ground that he is not getting the benefit of certain state services.
ii. It is the personal obligation of the individual to pay taxes under all circumstances
iii. There is no direct relationship between benefit and tax payment.

2.2 LITERATURE REVIEW
According to Greenwood et al. (2013), economists have been searching for empirical evidence connecting economic and financial development for a long time. Some academics focus on the links between financial and economic development of countries, while most of scientists investigate the causal relationship between financial development and economic growth. Greenwood et al. (2013) investigated the impact of financial development on economic development using the cross-country analysis. The results of this study show that financial development explains about 23 percent of cross-country dispersion in output. The analysis suggests that financial intermediation is important for economic development. Deidda (2006) analyzed the interaction between economic and financial development. According to this study, financial development occurs endogenously as the economy reaches a critical threshold of economic development. The results show that when financial development is sustainable, the credit market becomes more competitive and more efficient over time, and this could eventually contribute to economic growth. Fung (2009) tested for convergence in financial development and economic growth by incorporating the interaction between the real and financial sectors. The results of this study show strong evidence for conditional convergence. According to Fung (2009), middle- and high-income countries conditionally converge to parallel growth in economic and financial development. Fung (2009) also note that the mutually reinforcing relationship between financial development and economic growth is stronger in the early stage of economic development. Demetriades and Hussein (1996) conducted causality tests between financial development and real GDP using time series techniques. The results of this study provide little support to the view that finance is a leading sector in the process of economic development. Demetriades and Hussein (1996) also find considerable evidence of bi- directionality and some evidence of reverse causation.
Findings of this study also clearly demonstrate that causality patterns vary across countries. Levine (1997) recognizes that financial institutions might play an important role in economic growth. However, the empirical evidence of this study also suggests that the link between finance and growth is positive and strongly significant only at relatively high levels of economic development. Levine (1997) notes that for relatively less developed economies, the relationship is much weaker, if not insignificant or even negative. Levine et al. (2000) evaluated whether the development level of financial intermediaries exerts a casual influence on the economic growth. Using different statistical techniques, they found that the exogenous components of financial intermediary development are positively associated with economic growth. Da Silva (2002) analyzed how the development of the financial system affects business cycle’s volatility.

Agriculture: Even though Nigeria ranks sixth worldwide and first in Africa in agricultural output, agriculture has suffered from years of mismanagement, inconsistent and poorly conceived government policies, neglect and the lack of basic infrastructure. Still, the sector accounts for over 26.8% of GDP and two-thirds of employment.
Transport: Nigeria’s transportation infrastructure is a major constraint to economic development since transportation infrastructures continue to remain in bad shape. Transport in Nigeria has also suffered a lot of setbacks due to poor management and maintenance. Majority of Seaports, Airports, Railway systems, and Road transport facilities are way below average standards.
Tourism: Tourism is still a sector bringing in some much-needed revenue but it hasn’t been a strong point for Nigeria’s economic development. Management and maintenance issues have also plagued some places with historical values and tourism appeal.
Mining: Nigeria’s mining sector fell down the global pecking order in 2012 and it hasn’t fully recovered but the private investors interested in exploring the mining sector might just help boost it back provided Reform Policies and Opaque business ethics don’t cripple it off.
Electricity: Nigeria’s electricity production hasn’t been much to write home about, since the consumption continues to weigh down production. Nigeria consumes an estimate of 18 billion Kilowatts and the production is way insufficient to have power supply on a regular.
Services: Nigeria ranks 63rd worldwide and fifth in Africa in services output. Low power generation has crippled the growth of this sector. Economic growth from services output remains stymied by the high cost of doing business in Nigeria, crime threats and associated need for security counter measures, non-transparent economic decision making, especially in government contracting.
Other sectors have also contributed their tits and bits to economic development in Nigeria but no matter how ridiculously easy it sounds, there needs to be serious policy restructure, transparency in public-private partnership, and a change of mentality and attitude. Economic development in Nigeria has every potential for an upward spiral, should some policies change, and business environments made more conducive.

Angel Investors
Angel investors are individuals and businesses that are interested in helping small businesses survive and grow. So their objective may be more than just focusing on economic returns. Although angel investors often have somewhat of a mission focus, they are still interested in profitability and security for their investment. So they may still make many of the same demands as a venture capitalist. Angel investors may be interested in the economic development of a specific geographic area in which they are located. Angel investors may focus on earlier stage financing and smaller financing amounts than venture capitalists.
Government Grants
Federal and state governments often have financial assistance in the form of grants and/or tax credits for start-up or expanding businesses.
Equity Offerings
In this situation, the business sells stock directly to the public. Depending on the circumstances, equity offerings can raise substantial amounts of funds. The structure of the offering can take many forms and requires careful oversight by the company’s legal representative.
Warrants
Warrants are a special type of instrument used for long-term financing. They are useful for start-up companies to encourage investment by minimizing downside risk while providing upside potential. For example, warrants can be issued to management in a start-up company as part of the reimbursement package. A warrant is a security that grants the owner of the warrant the right to buy stock in the issuing company at a pre-determined (exercise) price at a future date (before a specified expiration date). Its value is the relationship of the market price of the stock to the purchase price (warrant price) of the stock. If the market price of the stock rises above the warrant price, the holder can exercise the warrant. This involves purchasing the stock at the warrant price. So, in this situation, the warrant provides the opportunity to purchase the stock at a

Financing Sustainability: Issues and Problems
There is growing recognition of the importance of mobilizing adequate financial resources to achieve the ambitious poverty reduction goals of the UN Millennium Declaration and to invest in the sustainable development of the developing world. Globally, there is also greater concern over the increasing polarization between the rich and poor of the world. This is coupled with an
increasing awareness that the situation will only continue to worsen unlessthere is a more concerted effort to identify and develop resource mobilization strategies for the developing world. In this regard, an inter-linked approach represents the most effective and efficient strategy for development programs and projects. The idea of sustainability is foundational to any development effort, and sustainability is dependent on a well-understood (and managed) environment. The
environment is not only a component of sustainable development it is a foundation for it, and part of the background to it. A sufficient understanding of the environment necessitates the recognition of its continuity. There are no boundaries to the environment, and in this sense the ‘global’ serves as the
background even for specific development projects. There is, therefore, always some way that MEA objectives can be integrated in sustainable development projects. To understand the important relationship between financing and international environmental institutions, it is necessary to understand the history behind the notion of creating a global framework to finance sustainable development activities. International deliberation on the issue of financial assistance to
developing countries for global environmental protection can be traced back at least to the 1972 UN Conference on the Human Environment. Yet, it was not until the 1987 release of the World Commission on Environment and Development report (Brundtland report) that the issue of financing for sustainable development gained global policy prominence (Sjoberg, 1994).

Financing Resources
During the UNCED negotiations, it was expected that bilateral and multilateral aid would finance sustainable development projects undertaken in pursuit of Agenda 21. These are the same sources upon which MEA mechanisms such as the Global Environment Facility (GEF) and the Multilateral Fund also depend for their capital infusion. While ODA flows decreased in the period immediately following the 1992 Earth Summit, private and commercial financial flows have increased, notwithstanding the Asian financial crisis in 1997-98. There is no data to demonstrate how much of this commercial financial flow is actually spent on sustainable development, but the available data does suggest that it could represent the way forward in locating supplementary financing for

There are exceptions to this rule, including leading developing economists critical of the Washington consensus (particularly Rodrik, 2007), the neo-Schumpeterian growth literature (see in particular Aghion and Howitt, 1998), and trade economists who have analyzed the implications of specialization patterns for growth, and emphasize the diverse technological learning paths that characterize different economic activities Our views share several of the analytical conclusions of these authors. A large part of our analysis has precisely focused on figuring out just how and why structure matters. In the empirical decompositions of change in production structures, we saw that fast growing economies are characterized by strong output and labor share shifts accompanied by sustained productivity growth, with strong reallocation effects in some cases. In contrast, in the less successful regions there was either scant structural change or deindustrialization combined with an increase in the share of informal, low-productivity services.
The analysis of trade structures likewise revealed that developing countries specialized in exports with high-technology contents tend to do better, and those specialized in natural resourced-based exports tend to perform poorly. A similar story applies to trade in services. Successful economies, such as India, have specialized in dynamic services that contribute significantly to overall productivity growth and high skilled employment. In several other regions, tourism represented a dynamic service activity but lacked these productivity links.This analysis carries an implicit message: intelligent sector-level policies can facilitate the development process. To an extent, structural change can be planned or, at least, induced. This analysis sheds light on the determinants of productivity growth. Stated goals of the liberalization package were to enhance labor productivity and employment growth. Outside the consistently expanding economies, this did not happen. Productivity movements across sectors differed in detail in the slow-growing and stagnant regions but, in general, did not add up to very much. Also, overall, liberalization did not help create jobs – industrial jobs in particular. Rather, it increased underemployment, which was absorbed most frequently in informal service activities and, in a few cases, in agriculture. The associated fall in productivity, which is quite common in the service sector in low-growth economies, indicates that poor productivity performance was more an effect than a cause of poor GDP growth.

stories during both the post-war “golden age” and the recent 2003-2007 boom. The clustering in time of both successes and collapses underscores a second stylized fact: international factors play a crucial role in the overall growth dynamics of the developing world. Again, this finding contrasts with the emphasis on domestic policies and institutions as the basic determinant of economic growth that characterizes mainstream analysis and, in particular, its numerous massive cross country econometric exercises (in which, with a few exceptions, international conditions are entirely absent from the analysis). The high frequency of developing country growth collapses during the lost decade of the 1980s was associated with the unusually large and in a sense unprecedented interest rates and terms of trade shocks that they faced, the effects of which lasted until the early 2000s. The recent boom must be understood, in turn, as the result of the end of the long-term effects of these adverse shocks, together with the positive linkages generated by the new engines of the world economy, particularly China. In the case of several low-income countries, debt relief and increased aid also played a role. The rapid spread of the recent world financial crisis to the developing world in the second half of 2008 serves to reinforce this dependence of growth performance on international factors. The painful adjustment and frustrating growth during the late twentieth century were accompanied with the change in the

How NGOs are Funded
As non-profits, NGOs rely on a variety of sources for funding, including:
• membership dues
• private donations
• the sale of goods and services
• grants
Despite their independence from government, some NGOs rely significantly on government funding. Large NGOs may have budgets in the millions or billions of dollars.
Types of NGOs
A number of NGO variations exist, including:
• BINGO: business-friendly international NGO (example: Red Cross)
• ENGO: environmental NGO (Greenpeace and World Wildlife Fund)
• GONGO: government-organized non-governmental organization (International Union for Conservation of Nature)
• INGO: international NGO (Oxfam)
• QUANGO: quasi-autonomous NGO (International Organization for Standardization [ISO])
What do NGOs bring to Development?
When NGOs began attracting attention during the late 1980s, they appealed to different sections of the development community for different reasons. For some Western donors, who had become frustrated with the often bureaucratic and ineffective governmentto-government, project-based aid then in vogue, NGOs provided an alternative and more flexible funding channel, which potentially offered a higher chance of local-level implementation and grassroots participation. For example, Cernea (1988: 8) argued that NGOs embodied ‘a philosophy that recognizes the centrality of people in development policies’, and that this, along with some other factors, gave them certain ‘comparative advantages’ over government and public sector. NGOs were seen as fostering local participation, since they were more locally rooted organizations, and therefore closer to marginalized people than most officials were. Poor people were often found to have been bypassed by existing public services, since many government agencies faced resource shortages and their decision-making processes were often captured by elites. Many also claimed that NGOs were generally operating at a lower cost, due to their use of voluntary community input

DISCUSS OTHER FINANCIAL ASPECTS OF DEVELOPMENT

The legal origins puts forward the idea that common law based systems, are better suited than civil law based systems, for the development of capital markets. This is because civil law evolved to protect private property from the authority while common law was developed with the aim of addressing corruption of the judiciary and enhancing the powers of the state. Consequently, it is argued that capital markets developed faster in countries with common law systems than in those with civil law systems. The view that common-law countries have better shareholder protection than civil law countries has been challenged in an important recent study. At such finances are used to developed sound legal system that will eradicate all forms of inefficiency in the market systems. This aspect of financial development has to do with the establishment of sound institutional system that will ensure that the right of everyone is protected. Unlike the civil laws that seek to satisfy the objective of those in power, this aspects of financial development advocates the funding of projects that will look into the origins of different laws that coordinate the production, consumption, and distribution system in every economy, so as to ensure the equitable distribution of resources in the society. Broad-based property rights protection is critical for investors and, consequently, for financial development. It takes central role in the political economy which, however, places little if any emphasis on the origin of the legal system. We may therefore conclude that while there is a broad consensus that a properly functioning legal system that provides effective protection for investors‟ property rights is important for financial development (and growth), the legal origins view is not widely accepted, indeed it has been largely discredited by lawyers.

DISCUSS OTHER FINANCIAL ASPECTS OF DEVELOPMENT

The legal origins puts forward the idea that common law based systems, are better suited than civil law based systems, for the development of capital markets. This is because civil law evolved to protect private property from the authority while common law was developed with the aim of addressing corruption of the judiciary and enhancing the powers of the state. Consequently, it is argued that capital markets developed faster in countries with common law systems than in those with civil law systems. The view that common-law countries have better shareholder protection than civil law countries has been challenged in an important recent study. At such finances are used to developed sound legal system that will eradicate all forms of inefficiency in the market systems. This aspect of financial development has to do with the establishment of sound institutional system that will ensure that the right of everyone is protected. Unlike the civil laws that seek to satisfy the objective of those in power, this aspects of financial development advocates the funding of projects that will look into the origins of different laws that coordinate the production, consumption, and distribution system in every economy, so as to ensure the equitable distribution of resources in the society. Broad-based property rights protection is critical for investors and, consequently, for financial development. It takes central role in the political economy which, however, places little if any emphasis on the origin of the legal system. We may therefore conclude that while there is a broad consensus that a properly functioning legal system that provides effective protection for investors‟ property rights is important for financial development (and growth), the legal origins view is not widely accepted, indeed it has been largely discredited by lawyers.
These contributions, acknowledge the importance of strong institutions for economic growth, but do not focus on financial development per se. They ascribe institutional quality differences to varying initial endowments and dynamic political economy factors.
The initial endowment hypothesis suggests that the disease environment encountered by a country can be a major obstacle for the establishment of institutions that would promote long run prosperity. Thus, it is argued that European colonial powers established extractive institutions that are unsuitable for long-term growth where the environment was unfavourable and institutions that were better suited for growth where they encountered favourable environments. The economic institutions hypothesis addresses the main shortcoming of the endowment hypothesis, by proposing a dynamic political economy framework in which differences in economic institutions are the fundamental causes of differences in economic development. Economic institutions, which determine the incentives and constraints of economic agents, are social decisions that are chosen for their consequences. Political institutions and income distribution are the dynamic forces that combine to shape economic institutions and outcomes.

• Duties (taxes on importation, levied at customs)
• Corporate income tax on corporations (incorporated entities)
• Wealth tax
• Personal income tax (may be levied on individuals, families such as the Hindu joint family in India, unincorporated associations, etc.)
Debt
Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.
As the government represents the people, government debt can be seen as an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.
Most government budgets are calculated on a cash basis, meaning that revenues are recognized when collected and outlays are recognized when paid. Some consider all government liabilities, including future pension payments and payments for goods and services the government has contracted for but not yet paid, as government debt. This approach is called accrual accounting, meaning that obligations are recognized when they are acquired, or accrued, rather tha

DISCUSS GOVERNMENT FINANCING, ITS SOURCES AND DISCUSS DEVELOPMENT FINANCING IN NIGERIA AND THEIR SOURCES
Government financing is the study of the means the government finances its projects in the economy. Government finance is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones. The proper role of government provides a starting point for the analysis of public finance. In theory, under certain circumstances, private markets will allocate goods and services among individuals efficiently (in the sense that no waste occurs and that individual tastes are matching with the economy's productive abilities). If private markets were able to provide efficient outcomes and if the distribution of income were socially acceptable, then there would be little or no scope for government. In many cases, however, conditions for private market efficiency are violated. For example, if many people can enjoy the same good at the same time (non-rival, non-excludable consumption), then private markets may supply too little of that good. National defense is one example of non-rival consumption, or of a public good
Sources of finance
Government expenditures are financed primarily in three ways:
• Government revenue
o Taxes
o Non-tax revenue (revenue from government-owned corporations, sovereign wealth funds, sales of assets, or seigniorage)
• Government borrowing
• Money creation

For example, McKinnon noted the importance of finance by using the example of technology adoption by farmers. He thought economic growth would be slowed without efficient finance because it would be virtually impossible Questions about the relations
for farmers to self-finance the needed investment to speedily adopt new technologies. Wachtel (2001) noted that McKinnon forcefully argued for financial liberalization and, by 1990, concluded that “there is widespread agreement that flows of saving and investment should be voluntary and significantly decentralized in an open capital market at close to equilibrium interest rates”.
Moving beyond money, Levine (1997) developed a comprehensive theoretical framework to explain how finance broadly defined can be conceptually linked to growth. This framework was used to organize his discussion regarding the explosion of research that emerged in the 1990s. The starting point is that financial markets and institutions may arise to ameliorate problems created by information and transaction frictions. Financial systems serve the primary function of facilitating the allocation of resources across space and time in an uncertain environment. These financial functions are expected to affect economic growth through capital accumulation and technological innovation. Levine’s framework helped guide subsequent empirical research that tested the relationship between finance and growth. Defined in this way, these functions help to justify the view that the financial sector operates like the “brain of the economy” (World Bank, 2001). 2. What does the empirical evidence reveal about the connection between financial development and growth?

in the previous work on the Millennium Development Goals. Financing for development is one of the most important UN approaches to support poor countries' financing of their development and the fight against poverty. The idea is to identify and coordinate new actors that can contribute to development both financially and with their expertise and competence. In order to reach the enormous sums that are required for a truly sustainable development, both private and public capital flows, other than official development assistance, must be involved. We need to engage actors such as banks, insurance companies and private donors while also working to develop tax systems in developing countries, which in many ways represent a huge potential resource. Official development assistance (ODA) remains the basis for the financing of development cooperation with development financing as a supplement. Sweden is working for all rich countries to live up to the agreement to designate at least 0.7 per cent of their gross national income (GNI) to development cooperation. At present, only a few countries meet this goal, among them Sweden. When traditional aid is combined with development financing there is an increase in total resources and also the probability of eradicating poverty. In several countries, including Germany, the UK and the Netherlands, financing for development is gradually being integrated into development cooperation. The supranational organization OECD as well as private and philanthropic actors have also begun working with development financing. Sida has been working with a series of projects in this area since 2014.

DISCUSS THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACTS
Development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of “real” per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population—how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure of production and employment so that agriculture’s share of both declines and that of the manufacturing and service industries increases. Development strategies have therefore usually focused on rapid industrialization, often at the expense of agriculture and rural development. With few exceptions, such as in development policy circles in the 1970s, development was until recently nearly always seen as an economic phenomenon in which rapid gains in overall and per capita GNI growth would either “trickle down” to the masses in the form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to “getting the growth job done.” Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP).
DISCUSS THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACTS
Development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of “real” per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population—how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure of production and employment so that agriculture’s share of both declines and that of the manufacturing and service industries increases. Development strategies have therefore usually focused on rapid industrialization, often at the expense of agriculture and rural development. With few exceptions, such as in development policy circles in the 1970s, development was until recently nearly always seen as an economic phenomenon in which rapid gains in overall and per capita GNI growth would either “trickle down” to the masses in the form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to “getting the growth job done.” Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP).

Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.
As the government represents the people, government debt can be seen as an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.

CHAPTER ONE
DISCUSSING THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACT
FINANCE:
Finance is the process of raising funds or capital for any kind of expenditure. Consumers, business firms, and governments often do not have the funds available to make expenditures, pay their debts, or complete other transactions and must borrow or sell equity to obtain the money they need to conduct their operations. Savers and investors, on the other hand, accumulate funds which could earn interest or dividends if put to productive use.

form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to “getting the growth job done.” Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP).
Global and domestic stylized facts on development
Financing for development is focused on new stakeholders in the financing of development cooperation. This is one of the most important UN approaches to supporting poor countries' financing of development and poverty reduction ¬- a necessity when official development assistance is no longer sufficient. The world is moving forward in many different areas, but to achieve the Global Goals for Sustainable Development, which define a sustainable world free from extreme poverty, we must mobilize resources from many different sources other than traditional state aid. The concept of "Financing for Development" was first adopted at a UN conference in Mexico in 2002. Today's development financing is primarily concerned with the financing of the Global Goals for Sustainable Development in low-income countries. When working with these goals, development financing plays a far more important role than in the previous work on the Millennium Development Goals. Financing for development is one of the most important UN approaches to support poor countries' financing of their development and the fight against poverty. The idea is to identify and coordinate new actors that can contribute to development both financially and with their expertise and competence. In order to reach the enormous sums that are required for a truly sustainable development, both private and public capital flows, other than official development assistance, must be involved. We need to engage actors such as banks, insurance companies and private donors while also working to develop tax systems in developing countries, which in many ways represent a huge potential resource. Official development assistance (ODA) remains the basis for the financing of development cooperation with development financing as a supplement. Sweden is working for all rich countries to live up to the agreement to designate at least 0.7 per cent of their gross national income (GNI) to development cooperation. At present, only a few countries meet this goal, among them Sweden. When traditional aid is combined with development financing there is an increase in total resources and also the probability of eradicating poverty. In several countries, including Germany, the UK and the Netherlands, financing for development is gradually being integrated into development cooperation. The supranational organization OECD as well as private and philanthropy form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to “getting the growth job done.” Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP).

FINANCIAL THEORY
Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to goods and services. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance. It centres on managing risk in the context of the financial markets, and the resultant economic and financial models. It essentially explores how rational investors
rational investors would apply risk and return to the problem of an investment policy. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), and to the Black–Scholes theory for option valuation; it further studies phenomena and models where these assumptions do not hold, or are extended. "Financial economics", at least formally, also considers investment under "certainty" (Fisher separation theorem, "theory of investment value", Modigliani–Miller theorem) and hence also contributes to corporate finance theory. Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize the relationships suggested.
Although they are closely related, the disciplines of economics and finance are distinct. The “economy” is a social institution that organizes a society’s production, distribution, and consumption of goods and services, all of which must be financed.

Role of NGOs in Toda’s Globalizing World
NGOs nationally and internationally indeed have a crucial role in helping and encouraging governments into taking the actions to which they have given endorsement in international fora. Increasingly, NGOs are able to push around even the largest governments. NGOs are now essentially important actors before, during, and increasingly after, governmental decision-making sessions.
The UN Secretary-General in 1995 said:
"Non-governmental organizations are a basic element in the representation of the modern world. And their participation in international organizations is in a way a guarantee of the latter’s political legitimacy. On all continents non-governmental organizations are today continually increasing in number. And this development is inseparable from the aspiration to freedom and democracy which today animates international society… From the standpoint of global democratization, we need the participation of international public opinion and the mobilizing powers of non-governmental organizations" NGOs are facing a challenge to organize themselves to work in more global and strategic ways in the future. They must build outwards from concrete innovations at grassroots level to connect with the forces that influence patterns of poverty, prejudice and violence: exclusionary economics, discriminatory politics, selfish and violent personal behavior, and the capture of the world of knowledge and ideas by elites. In a sense this is what NGOs are already doing, by integrating micro and macro-level action in their project and advocacy activities. "Moving from development as delivery to development as leverage is the fundamental change that characterizes this shift, and it has major implications for the ways in which NGOs organize themselves, raise and spend their resources, and relate to others."
Interactions with the State
As it is mentioned already, one of the fundamental reasons that NGOs have received so much attention of late is that they are perceived to be able to do something that national governments cannot or will not do. However, it is important to recognize that relations between NGOs and governments vary drastically from region to region and country to country. For example, NGOs in India derive much support and encouragement from their government and tend to work in close collaboration with it. NGOs from Africa also acknowledged the frequent need to work closely with their government or at least avoid antagonizing the authorities. Most NGOs from Latin America offered a much different perspective: NGOs and other grassroots organizations as an opposition to government.

financing needs since their ability to generate internal cash flow would depend on the market power they have or the demand they face. Moreover, the level of competition faced by the firm may itself depend on the development of the financial system, introducing more endogeneity.
Beck, Demirguc-Kunt, Laeven and Levine (2006) use Rajan and Zingales (1998) approach to highlight a distributional effect: They find that industries that are naturally composed of small firms grow faster in financially developed economies, a result that provides additional evidence that financial development disproportionately promotes the growth of smaller firms. Beck, Demirguc-Kunt and Maksimovic (2005) also highlight the size effect, but using firm survey data: they show that financial development eases the obstacles that firms face to growing faster, and that this effect is stronger particularly for smaller firms. More recent survey evidence also suggests that access to finance is associated with fast rates of innovation and firm dynamism consistent with the cross-country finding that finance promotes growth through productivity increases (Ayyagari, Demirguc-Kunt and Maksimovic, 2007b).
Dropping the cross-country dimension and focusing on an individual country often increases the confidence in the results by reducing potential biases due to measurement error and reducing concerns about omitted variables and endogeneity. In a study of individual regions of Italy, Guiso, Sapienza and Zingales (2002) use a household dataset and examine the effect of differences in local financial development on economic activity across different regions. They find that local financial development enhances the probability that an individual starts a business, increases industrial competition, and promotes growth of firms. And these results are stronger for smaller firms which cannot easily raise funds outside of the local area. Another example is Haber’s (1997) historical comparison of industrial and capital market development in Brazil, Mexico and the United States between 1830 and 1930. He uses firm level data to illustrate that international differences in financial development significantly affected the rate of industrial expansion.
Perhaps one of the cleanest ways of dealing with identification problems is to focus on a particular policy change in a specific country and evaluate its impact. One example of this approach is Jayaratne and Strahan’s (1996) investigation of the impact of bank branch reform in individual states of the United States. Since early 1970s, U.S. states started relaxing impediments on their intrastate branching. Using a difference-in-difference methodology, Jayaratne and Strahan estimate the change in economic growth rates after branch reform relative to a control group of states that did not reform. They show that bank branch reform boosted bank-lending quality and accelerated real per capita growth rates. In another study Bertrand, Schoar and Thesmar (2004) provide firm-level evidence from France that shows the impact of 1985 deregulation eliminating government intervention in bank lending decisions fostered greater competition in the credit market, inducing an increase in allocative efficiency across firms. Of course focusing on individual country cases often raises the question how applicable the results are in different country settings. Nevertheless, these careful country-level analyses boost our confidence in the link between financial development and growth that is suggested by the cross-country studies.

In a study, Aliyu adapted graphic descriptive statistics and the oneway analysis of variance technique to investigate whether the neglect of agricultural sector was as a result of the discovery and exploitation of oil in Nigeria. The study found a significant increase in the quantity of capital expenditure allocated to agricultural sector during the oil boom period and that more capital expenditure was allocated to agricultural sector than was allocated to either of health, education or defense sector in Nigeria during the period. The study concluded by rejecting the hypothesis that the neglect of agricultural sector was as a result of oil boom.
Generally, a government of various countries (developed, developing and under-developed) requires financial resources to boost the economic and social wellbeing of her citizens. Consequently, this pressing need of finance have propelled the government of many nations to introduce various means of raising finances for economic growth and development. Sequel to this, this study examined the effect of various sources of government revenue on the growth of Nigerian economy. Consequently, having collected and analyzed the data on yearly real gross domestic product growth rate, aggregate government revenue generated from oil and non-oil sources, oil revenue, tax revenue, external debt and national savings. It was observed that revenue from taxes and oil had a positive effect on economic growth in Nigeria, while the effect of national savings and external debt were negative. On the other hand, the aggregate government revenue was not sufficient enough to foster economic growth in Nigeria, which was assumed to be due to capital flight, leakages of tax revenue, corrupyion, tax evasion, misappropriation of oil revenue.

CHAPTER FOUR
OTHER FINANCIAL ASPECT OF DEVELOPMENT
By now there is an ever-expanding body of evidence that suggests countries with better developed financial systems experience faster economic growth (Levine, 1997 and 2005). More recent evidence also suggests financial development not only promotes growth, but also improves the distribution of income. The following sections provide a brief review of this literature and its findings, also discussing the main criticisms, namely issues of identification, problems associated with measurement and nonlinearities, as well as potential counterexamples and outliers.

active in humanitarian, educational, health care, public policy, social, human rights, environmental, and other areas to effect changes according to their objectives. They are thus a subgroup of all organizations founded by citizens, which include clubs and other associations that provide services, benefits, and premises only to members. Sometimes the term is used as a synonym of "civil society organization" to refer to any association founded by citizens, but this is not how the term is normally used in the media or everyday language, as recorded by major dictionaries. The explanation of the term by NGO.org (the non-governmental organizations associated with the United Nations) is ambivalent. It first says an NGO is any non-profit, voluntary citizens' group which is organized on a local, national or international level, but then goes on to restrict the meaning in the sense used by most English speakers and the media: Task-oriented and driven by people with a common interest, NGOs perform a variety of service and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information. NGOs are usually funded by donations, but some avoid formal funding altogether and are run primarily by volunteers. NGOs are highly diverse groups of organizations engaged in a wide range of activities, and take different forms in different parts of the world. Some may have charitable status, while others may be registered for tax exemption based on recognition of social purposes. Others may be fronts for political, religious, or other interests. Since the end of World War II, NGOs have had an increasing role in international development,[ particularly in the fields of humanitarian assistance and poverty alleviation. The number of NGOs worldwide is estimated to be 10 million. Russia had about 277,000 NGOs in 2008. India is estimated to have had around 2 million NGOs in 2009, just over one NGO per 600 Indians, and many times the number of primary schools and primary health centres in India. China is estimated to have approximately 440,000 officially registered NGOs.
The rise and role of NGOs in sustainable development
Non-governmental organizations (NGOs) have played a major role in pushing for sustainable development at the international level. Campaigning groups have been key drivers of inter-governmental negotiations, ranging from the regulation of hazardous wastes to a global ban on land mines and the elimination of slavery. But NGOs are not only focusing their energies on governments and inter-governmental processes. With the retreat of the state from a number of public functions and regulatory activities, NGOs have begun to fix their sights on powerful corporations – many of which can rival entire nations in terms of their resources and influence. Aided by advances in information and communications technology, NGOs have helped to focus attention on the social and environmental externalities of business activity.

Another key role for NGOs is to act as monitors which can, in Najam’s (1999: 152) phrase, ‘keep policy honest’. This role may include the idea of being a whistle-blower if certain policies remain unimplemented or are carried out poorly, as well as scanning the policy horizon for events and activities which could interfere with future policy development and implementation. An example of this is the US-based NGO CorpWatch, which was founded in 1996. It aims to investigate and expose corporate violations of human rights, environmental crimes, fraud, and corruption around the world and its mission is to foster global justice, independent media activism and more democratic control over corporations. It claims to have led the exposure of the deplorable working conditions in the Vietnamese clothing factories that supplied the sportswear manufacturer Nike in the mid 1990s. More recently, it has published two books – entitled Iraq Inc. and Afghanistan Inc. – which investigate the ways in which multinational corporations (MNCs) are making profits out of these two wars and from the reconstruction efforts which have followed. Numerous NGOs are entirely devoted to monitoring the behaviour of multinational companies, although their objectives vary widely. Lodge and Wilson (2006) argue that such organizations act as powerful watchdogs without any formal mandate or recourse to a particular legal framework, and that MNC managers, who might be willing to respond positively to an NGO request, are often uncertain about what is expected of them. International, a development NGO with a highly visible watchdog role in relation to issues of governance and corruption.
Partnership
A key element of current development policy is the creation of partnerships as a way of making more efficient use of scarce resources, increasing institutional sustainability and improving the quality of an NGO’s interactions. Partnership usually refers to an agreed relationship based on a set of links between two or more agencies within a project or programme, usually involving a division of roles and responsibilities, a sharing of risks and the pursuit of joint objectives. Yet partnership can also be seen as a development ‘buzzword’ par excellence, since it has come to mean different things to different development actors. At first, in the early 1990s, partnerships were proclaimed as a key policy idea but there were few clear or precise definitions. The 1997 British government White Paper on development was full of references to partnerships between countries, donors, governments, NGOs and businesses, but was vague as to the forms such partnerships might take (DFID 1997). More recently, Cornwall (2005) has shown how Action Aid Brazil’s understanding of partnership with Centro Mulheres do Cabo, a local community organization, has developed from simply

(1988) has been influential in the manner in which it shows the ways social actors build and act on identities, such as workers, women, students or environmentalist activists, to generate these new forms of social movements which emerge out of the everyday experiences of citizens living under conditions of domination. The issue of social movements raises important issues about their relationship with NGOs. Korten’s schema (see Chapter 1) was one in which the act of linking up with social movements and joining broader struggles for transformation represented the final and decisive stage in the maturation process of sustainable development NGOs. He also drew attention to the ways in which development NGOs may sometimes be born as the end-points of social movements, as in the case of James Yen’s literacy movement in 1940s China, which led to the formation of the International Institute for Rural Reconstruction and which has remained an influential NGO, with its headquarters in the Philippines. Some NGOs can be seen as organizational components of social movements which seek connections with institutionalized systems of decision-making in order to represent their interests and objectives . (McCarthy and Zald 1977). On the other hand, NGOs may become advocates of issues which have yet to generate a wider social movement, such as child rights or consumer rights, by acting on behalf of a certain part of the population as the ‘advance guard’ for ideas for change. This connects with discussions of NGO advocacy and partnership discussed in Chapter 5. Critics such as Kaldor (2003) instead point to the tendency for NGOs to represent sometimes the domestication or taming of previously radical grassroots social movements for change, which become institutionalized, while others see NGOs as professionalized, externally funded competitors to social movements which may draw away and dissipate their radical energies and their grassroots support base. In Brazil, Dagnino (2008) argues that local social movements have been crowded out, in the engagement between neoliberal development agencies and NGOs in relation to building participation and democratization, with the result that the broader concept of citizenship has been depoliticized. On the other hand, distinguishing between movements and organizations is not always a straightforward matter. Hopgood (2006) shows that Amnesty International can, in many respects, be seen as much as a ‘movement’ as an ‘NGO’, reflecting the idea that when it comes to value-driven public action around issues such as development or human rights, the boundaries between organizations and movements can be ambiguous. Hulme (2008) also suggests that making a clear conceptual distinction between NGOs and social movements is not always useful, given ‘the fluidity of analytical boundaries’.
NGO roles in contemporary development practice
Service delivery

• GONGO: government-organized non-governmental organization (International Union for Conservation of Nature)
• INGO: international NGO (Oxfam)
• QUANGO: quasi-autonomous NGO (International Organization for Standardization [ISO])
What do NGOs bring to Development?
When NGOs began attracting attention during the late 1980s, they appealed to different sections of the development community for different reasons. For some Western donors, who had become frustrated with the often bureaucratic and ineffective governmentto-government, project-based aid then in vogue, NGOs provided an alternative and more flexible funding channel, which potentially offered a higher chance of local-level implementation and grassroots participation. For example, Cernea (1988: 8) argued that NGOs embodied ‘a philosophy that recognizes the centrality of people in development policies’, and that this, along with some other factors, gave them certain ‘comparative advantages’ over government and public sector. NGOs were seen as fostering local participation, since they were more locally rooted organizations, and therefore closer to marginalized people than most officials were. Poor people were often found to have been bypassed by existing public services, since many government agencies faced resource shortages and their decision-making processes were often captured by elites. Many also claimed that NGOs were generally operating at a lower cost, due to their use of voluntary community input. Finally, NGOs were seen as possessing the scope to experiment and innovate with alternative ideas and approaches to development. Some NGOs were also seen as bringing a set of new and progressive development agendas of participation, gender, environment and empowerment that were beginning to capture the imagination of many development activists at this time. For other donors and some governments, concerned with the need to liberalize and roll back the state as part of structural adjustment policies (SAPs), NGOs were also seen as a cost-effective and efficient alternative to public sector service delivery. Structural adjustment was a condition of many of the loans provided by the World Bank and the IMF from the late 1970s onwards which obliged governments to reduce the role of the state in the running of the economy and the social sectors, to open up the economy to foreign investment and to reduce barriers to trade.
NGOs and contemporary development theory
Three other areas of current applied development theory are relevant to NGOs, and these are briefly introduced here.
Social exclusion
Originating from work on social policy and poverty in industrialized countries, the concept of social exclusion has come to be incorporated into development theory in some quarters. As an approach to understanding poverty, it shifts attention away from simple economic measurements of poverty, to focus on the processes which produce it and the capacity of people to operationalize their rights to social and economic well-being. As Kabeer (2004: 2) writes, the value of social exclusion is in offering an integrated way of looking at different forms of disadvantage which have tended to be dealt with separately … In particular it captures the experiences of the certain groups and categories in a society of somehow being ‘set apart’ from others, of being ‘locked-out’ or ‘left behind’ in a way that the existing

issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.
Most government budgets are calculated on a cash basis, meaning that revenues are recognized when collected and outlays are recognized when paid. Some consider all government liabilities, including future pension payments and payments for goods and services the government has contracted for but not yet paid, as government debt. This approach is called accrual accounting, meaning that obligations are recognized when they are acquired, or accrued, rather than when they are paid. This constitutes public debt.
SEIGNIORAGE
Seigniorage is the net revenue derived from the issuing of currency. It arises from the difference between the face value of a coin or bank note and the cost of producing, distributing and eventually retiring it from circulation. Seigniorage is an important source of revenue for some national banks, although it provides a very small proportion of revenue for advanced industrial countries.
Government expenditures
Economists classify government expenditures into three main types. Government purchases of goods and services for current use are classed as government consumption. Government purchases of goods and services intended to create future benefits – such as infrastructure investment or research spending – are classed as government investment. Government expenditures that are not purchases of goods and services, and instead just represent transfers of money – such as social security payments – are called transfer payments.
Government operations
Government operations are those activities involved in the running of a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements) for the purpose of producing value for the citizens. Government operations have the power to make, and the authority to enforce rules and laws within a civil, corporate, religious, academic, or other organization or group.
Income distribution
• Income distribution – Some forms of government expenditure are specifically intended to transfer income from some groups to others. For example, governments sometimes transfer income to people that have suffered a loss due to natural disaster. Likewise, public pension programs transfer wealth from the young to the old. Other forms of government expenditure which represent purchases of goods and services also have the effect of changing the income distribution. For example, engaging in a war may transfer wealth to certain sectors of society. Public education transfers wealth to families with children in these schools. Public road construction transfers wealth from people that do not use the roads to those people that do (and to those that build the roads).

Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day tax burden.[7] The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.[8]
A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as corvée labor. A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government [ . . .] a payment exacted by legislative authority."[9] A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government [ . . .] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."[10]
• There are various types of taxes, broadly divided into two heads – direct (which is proportional) and indirect tax (which is differential in nature):
• Stamp duty, levied on documents
• Excise tax (tax levied on production for sale, or sale, of a certain good)
• Sales tax (tax on business transactions, especially the sale of goods and services)
o Value added tax (VAT) is a type of sales tax
o Services taxes on specific services
• Road tax; Vehicle excise duty (UK), Registration Fee (USA), Regco (Australia), Vehicle Licensing Fee (Brazil) etc.
• Gift tax
• Duties (taxes on importation, levied at customs)
• Corporate income tax on corporations (incorporated entities)
• Wealth tax
• Personal income tax (may be levied on individuals, families such as the Hindu joint family in India, unincorporated associations, etc.)
Debt

CHAPTER THREE
GOVERNMENT FINANCING, ITS SOURCES AND DISCUSS DEVELOPMENT FINANCING IN NIGERIA AND THEIR SOURCES
OVERVIEW OF GOVERNMENT FINANCING
The proper role of government provides a starting point for the analysis of public finance. In theory, under certain circumstances, private markets will allocate goods and services among individuals efficiently (in the sense that no waste occurs and that individual tastes are matching with the economy's productive abilities). If private markets were able to provide efficient outcomes and if the distribution of income were socially acceptable, then there would be little or no scope for government. In many cases, however, conditions for private market efficiency are violated. For example, if many people can enjoy the same good at the same time (non-rival, non-excludable consumption), then private markets may supply too little of that good. National defence is one example of non-rival consumption, or of a public good. "Market failure" occurs when private markets do not allocate goods or services efficiently. The existence of market failure provides an efficiency-based rationale for collective or governmental provision of goods and services. Externalities, public goods, informational advantages, strong economies of scale, and network effects can cause market failures. Public provision via a government or a voluntary association, however, is subject to other inefficiencies, termed "government failure." Under broad assumptions, government decisions about the efficient scope and level of activities can be efficiently separated from decisions about the design of taxation systems (Diamond-Mirlees separation). In this view, public sector programs should be designed to maximize social benefits minus costs (cost-benefit analysis), and then revenues needed to pay for those expenditures should be raised rational investors would apply risk and return to the problem of an investment policy. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), and to the Black–Scholes theory for option valuation; it further studies phenomena and models where these assumptions do not hold, or are extended. "Financial economics", at least formally, also considers investment under "certainty" (Fisher separation theorem, "theory of investment value", Modigliani–Miller theorem) and hence also contributes to corporate finance theory. Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize the relationships suggested.
Although they are closely related, the disciplines of economics and finance are distinct. The “economy” is a social institution that organizes a society’s production, distribution, and consumption of goods and services, all of which must be financed.

How have economists’ views evolved over time regarding the relationship between the financial system and growth?
Historically, economists have held strikingly different views about the importance of the financial system for economic growth (Levine, 1997). On the one hand, John Hicks argued that it played a critical role in England’s industrialization, while Joseph Schumpeter reasoned that well-functioning banks spurred technological innovation by identifying and funding the most innovative entrepreneurs. On the other hand, Joan Robinson felt that where enterprise led, then finance would follow. Levine observed that the pioneers of development economics often did not even mention finance in their work. Gurley and Shaw (1960) identified contributions that finance makes to the economy and Patrick (1966) observed that some countries pursued supply-leading policies which were intended to accelerate growth by expanding the financial system. Goldsmith (1969) is credited with being the first to document the growth in financial activities that occurs with overall growth in the economy, but he hesitated to conclude the direction of causality: Were financial factors responsible for accelerating economic development or did financial development reflect economic growth? Shaw (1973) and McKinnon (1973) were the first to describe how controls and regulations contributed to financial repression, which negatively affects economic growth. Their models were narrowly focused on money, although their descriptive narratives were broader. For example, McKinnon noted the importance of finance by using the example of technology adoption by farmers. He thought economic growth would be slowed without efficient finance because it would be virtually impossible for farmers to self-finance the needed investment to speedily adopt new technologies. Wachtel (2001) noted that McKinnon forcefully argued for financial liberalization and, by 1990, concluded that “there is widespread agreement that flows of saving and investment should be voluntary and significantly decentralized in an open capital market at close to equilibrium interest rates”
Moving beyond money, Levine (1997) developed a comprehensive theoretical framework to explain how finance broadly defined can be conceptually linked to growth. This framework was used to organize his discussion regarding the explosion of research that emerged in the 1990s. The starting point is that financial markets and institutions may arise to ameliorate problems created by information and transaction frictions. Financial systems serve the primary function of facilitating the allocation of resources across space and time in an uncertain environment. These financial functions are expected to affect economic growth through capital accumulation and technological innovation. Levine’s framework helped guide subsequent empirical research that tested the relationship between finance and growth. Defined in this way, these functions help to justify the view that the financial sector operates like the “brain of the economy” (World Bank, 2001). 2. What does the empirical evidence reveal about the connection between financial development and growth?
Does the impact of finance vary by size or type of firm or industry?

Financial mathematics is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory that is involved in financial mathematics. Generally, mathematical finance will derive, and extend, the mathematical or numerical models suggested by financial economics. In terms of practice, mathematical finance also overlaps heavily with the field of computational finance (also known as financial engineering). Arguably, these are largely synonymous, although the latter focuses on application, while the former focuses on modelling and derivation (see: Quantitative analyst). The field is largely focused on the modelling of derivatives, although other important subfields include insurance mathematics and quantitative portfolio problems. See Outline of finance: Mathematical tools; Outline of finance: Derivatives pricing.

Development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of “real” per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population—how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure of production and employment so that agriculture’s share of both declines and that of the manufacturing and service industries increases. Development strategies have therefore usually focused on rapid industrialization, often at the expense of agriculture and rural development. With few exceptions, such as in development policy circles in the 1970s, development was until recently nearly always seen as an economic phenomenon in which rapid gains in overall and per capita GNI growth would either “trickle down” to the masses in the form of jobs and other economic opportunities or create the necessary conditions for the wider distribution of the economic and social benefits of growth. Problems of poverty, discrimination, unemployment, and income distribution were of secondary importance to “getting the growth job done.” Indeed, the emphasis is often on increased output, measured by gross domestic product (GDP).
Global and domestic stylized facts on development
Financing for development is focused on new stakeholders in the financing of development cooperation. This is one of the most important UN approaches to supporting poor countries' financing of development and poverty reduction ¬- a necessity when official development assistance is no longer sufficient. The world is moving forward in many different areas, but to achieve the Global Goals for Sustainable Development, which define a sustainable world free from extreme poverty, we must mobilize resources from many different sources other than traditional state aid. The concept of "Financing for Development" was first adopted at a UN conference in Mexico in 2002. Today's development financing is primarily concerned with the financing of the Global Goals for Sustainable Development in low-income countries.

QUESTION 3A
DISCUSS GOVERNMENT FINANCING AND ITS SOURCES
INTRODUCTION
Government financing is the process or the role of the government in funding the economy or the financing its activities. It is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.
The purview of public finance is considered to be threefold namely the governmental effects on:
i. efficient allocation of resources;
ii. distribution of income;
iii. macro-economic stabilization
Government expenditure is financed by the revenue it generates. Thus, we will focus on what the government revenue is and how it is sourced by the government and which other way too can be used to raise money for funding the expenses of the government as well as how government can increase the revenue it gets.
Government revenue is money received by a government. It is an important tool of the fiscal policy of the government and is the opposite factor of government spending.

USES OF GOVERNMENT REVENUE
1. It is used to benefit the country.
2. Governments use revenue to better develop the country, to fix roads, build homes, fix schools and so on..
3. The money that government collects pays for the services that are provided for the people.
SOURCES OF GOVERNMENT FINANCING
1. Tax revenue
2. Non-tax revenue
3. Capital receipts
4. Seignorage
5. Charges and fees
6. Earnings
7. Debt

The concentration of the banking industry may also have a qualifying effect on growth. For example, an unconcentrated industry might approximate perfectly competitive conditions compared to a market dominated by a few banking institutions. Uncompetitive markets can introduce inefficiencies that reduce the total amount of credit available in the economy and harm firms’ access to credit, thus hindering growth. However, banks with monopoly power may have greater incentives to establish lending relationships with clients that facilitate access to credit.
FACILITATING ACCESS TO FINANCE
Access to financial services has increasingly been receiving greater emphasis over the recent years, becoming a focal part of the overall development agenda. One reason is that modern development theory sees the lack of access to finance as a critical mechanism for generating persistent income inequality, as well as slower growth. Another is the observation that small enterprises and poor households face much greater obstacles in their ability to access finance all around the world, but particularly in developing countries.
What does access to finance mean? Broad access to financial services implies an absence of price and non-price barriers. It is difficult to define and measure because there are many dimensions of access, including availability, cost, and range and quality of services being offered. While there is much data on financial sector development more broadly, until recently there was very little data on usage and access to finance, both for households and firms. Hence, there is also very limited analysis on the impact of access to finance on economic development. Research using firm level survey data suggests that financing obstacles are the most constraining among different barriers to growth. Financing obstacles are also found to be highest and most constraining for the growth of smaller firms. At the household level, lack of access to credit is shown to perpetuate poverty because poor households reduce their children’s education. Similarly, Dehejia and Gatti find that child labour rates are higher in countries with under-developed financial systems, while Beegle et al. show that transitory income shocks to greater increases in child labour in countries with poorly functioning financial systems.

QUESTION 2
DO A CRITICAL ANALYSIS OF THE LINKAGE AND INTERLINKAGE BETWEEN FINANCE AND DEVELOPMENT
Economic development is commonly discussed in terms of wealth, the labour force, output, and income. Development is associated with debt issue at some points in the economic system and corresponding accretions of financial assets elsewhere. It is accompanied, too, by the "institutionalization of saving and investment" that diversifies channels for the flow of loan able funds and multiplies varieties of financial claims. Development also implies, as cause or effect, change in market prices of financial claims and in other terms of trading in loan able funds. Development involves finance as well as goods.
RELATIONSHIP OF FINANCE AND DEVELOPMENT
The empirical literature on finance and development suggests that countries with better developed financial systems experience faster economic growth and enjoy lower levels of poverty and income inequality. Historically, economists have held strikingly different views about the importance of the financial system for economic growth . On the one hand, John Hicks argued that it played a critical role in England’s industrialization, while Joseph Schumpeter reasoned that well-functioning banks spurred technological innovation by identifying and funding the most innovative entrepreneurs. On the other hand, Joan Robinson felt that where enterprise led, then finance would follow. Levine observed that the pioneers of development economics often did not even mention finance in their work. Gurley and Shaw (1960) identified contributions that finance makes to the economy and Patrick (1966) observed that some countries pursued supply-leading policies which were intended to accelerate growth by expanding the financial system. Shaw (1973) and McKinnon (1973) were the first to describe how controls and regulations
Moving beyond money, Levine developed a comprehensive theoretical framework to explain how finance broadly defined can be conceptually linked to growth. This framework was used to organize his discussion regarding the explosion of research that emerged in the 1990s. The starting point is that financial markets and institutions may arise to ameliorate problems created by information and transaction frictions. Financial systems serve the primary function of facilitating the allocation of resources across space and time in an uncertain environment. This primary function was broken into five basic functions:
• facilitate the trading, hedging, diversifying, and pooling of risk,
• allocate resources,
• monitor managers and exert corporate control,
• mobilize savings, and
• facilitate the exchange of good and services.
These financial functions are expected to affect economic growth through capital accumulation and technological innovation. Levine’s framework helped guide subsequent empirical research that tested the relationship between finance and growth. Defined in this way, these functions help to justify the view that the financial sector operates like the “brain of the economy” (World Bank, 2001).

FINANCE AND DEVELOPMENT (GLOBAL AND DOMESTIC STYLIZED FACTS)
Developing countries that opened their capital accounts and relied more heavily on foreign finance did not promote growth and investment, however; in fact, they grew more slowly than their peers . At the same time, the volatility of capital flows increased, their pro-cyclical nature exacerbated macro-economic instability, and financial crises became much more frequent. These crises generally follow a similar pattern. Capital inflows based on market optimism fuel credit bubbles, leading to increases in the values of real estate and the currency; but over-indebtedness soon undermines the capacity to repay. Once the bubble bursts, capital inflows stop and the ensuing credit crunch leads to economic contraction. The social costs of such crises are extremely high. Laeven and Valencia (2012) find that since the onset of the global financial crisis, the median output loss from systemic banking crises, which often coincide with currency crises, has amounted to 25 per cent of GDP. The economic strength of countries lies in cities; in fact, urban gross domestic product (GDP) represents about 80 per cent of world GDP. Cities have been pivotal centers for economic growth, employment creation, innovation and cultural exchange. Cities in many developing countries (e.g., Bangladesh, Brazil, China, Honduras, India, Nigeria, Peru and South Africa) concentrate the core of modern productive activities and are the areas par excellence where income-earning opportunities are to be found. Cities are also the centers where women enjoy the highest labour participation, health access, literacy rates and upward social mobility Over 50 per cent of the world’s urban populations lived in settlements with 500,000 people or less by 2010. Although their significance will remain, the share will have been reduced to 42 per cent by 2025 (United Nations, Department of Economic and Social Affairs, Population Division, 2012). Medium cities (those with 1 million-5 million people), on the other hand, will increase their share of the urban population, from 21 to 24 per cent over a similar time interval. The share of the urban population in large cities (those with more than 5 million people), including mega-cities, will grow the most, from 17 to 22 per cent, with an absolute increase of more than 410 million people. By 2010, mega-cities of 10 mil-lion inhabitants or more contained only 10 per cent of the global urban population.

FINANCE AND DEVELOPMENT (GLOBAL AND DOMESTIC STYLIZED FACTS)
King and Levine provide cross-country evidence on the positive effects of finance on growth, which they interpret as causal. Demetriades and Hussein provide time-series evidence from 16 developing countries which suggests that banking sector development does not always Grange-cause economic growth. If anything, the evidence suggests that the relationship between finance and growth frequently exhibits reverse causality i.e. it is economic growth that causes financial development and often not vice-versa. Further skepticism on causality results obtained using cross-country regressions in the finance-growth context is provided by Arestis and Demetriades. These studies suggest that time-series approaches are needed in order to establish the direction of causality between financial development and economic growth. Arestis and Demetriades advocate further caution in interpreting the relationship between finance and growth in a causal way, alluding to the role of country specific institutional factors and policies which are likely to affect the nature of this relationship. Among other things, they argue that financial systems operating under conditions of weak governance, manifested, for example, in poorly designed or corruption-prone directed credit programmes, are unlikely to be able to promote growth. Their ideas are taken further in a recent empirical study by Demetriades and Law, who provide evidence which suggests that financial development has greater effects on growth when the financial system is embedded within a sound institutional framework. Demetriades and Law also find that the effects of finance on growth are most potent in the case of middle income countries, and rather weak in the case of low-income countries, confirming the earlier findings. Thus, it appears that the relationship between finance and growth is sensitive not only to the level of economic and/or financial development but also to institutional development. Even within similar income groups, it varies substantially according to the degree of institutional quality.

Role of Institutions and Governance in Effects of Globalization
Although it is difficult to find a simple relationship between financial globalization and growth or consumption volatility, there is some evidence of nonlinearities or threshold effects in the relationship. Financial globalization, in combination with good macroeconomic policies and good domestic governance, appears to be conducive to growth. For example, countries with good human capital and governance tend to do better at attracting foreign direct investment (FDI), which is especially conducive to growth. More specifically, recent research shows that corruption has a strongly negative effect on FDI inflows. Similarly, transparency of government operations, which is another dimension of good governance, has a strong positive effect on investment inflows from international mutual funds.
The vulnerability of a developing country to the risk factors associated with financial globalization is also not independent of the quality of macroeconomic policies and domestic governance. For example, research has demonstrated that an overvalued exchange rate and an overextended domestic lending boom often precede a currency crisis. In addition, lack of transparency has been shown to be associated with more herding behavior by international investors, which can destabilize a developing country's financial markets. Finally, evidence shows that a high degree of corruption may affect the composition of a country's capital inflows, thereby making it more vulnerable to the risks of speculative attacks and contagion effects.
Thus, the ability of a developing country to derive benefits from financial globalization and its relative vulnerability to the volatility of international capital flows can be significantly affected by the quality of both its macroeconomic framework and its institutions

Do a critical analysis of the linear linkages and inter linkages between finance and development

Discuss government financing its source and discuss development financing in Nigeria and their sources

The overall aim of this paper is to provide a selective review of critical issues facing African policy makers in mobilizing resources to finance development. To set the stage, the paper discusses in Section II the recent performance of African economies and evaluates it against specific, time-bound, poverty- reduction objectives and targets (adapted from the Copenhagen Summit). The indicative scenario (assumptions spelled out in the text) is to reduce poverty by half by the year 2015—a rate of reduction of the poverty level at an annual rate of 4 per cent per annum. The objective is to highlight the growth rates and broad orders of magnitude of the resource needs and the policy challenges implied by the poverty reduction targets. The key conclusion is that macroeconomic performance of the past four years — 4.5 average annual GDP growth, resulting in positive per capita income rise— has laid a good foundation for growth. But while commendable, if the growth rates are not raised substantially — to an average of 7 percent per annum for Africa [8 per cent for Sub-Saharan Africa]—the poverty reduction targets are not likely to be attained. At the projected levels of domestic savings and efficiency of capital, the average annual magnitudes of external resources (measured as a proportion of GDP) needed to realize the set poverty reduction targets are 47 per cent during 1999-20000; 32 per cent during 2001-2005; and 10 per cent for the period 2006-2010 for Sub-Saharan Africa. North Africa needs about 5 per cent of GDP in external resources, which, in light of the present ODA flows — averaging about 3 per cent of GDP — leaves a financing gap of 2 per cent of GDP.
2. Considering the strong effort, which led to the good recent performance, the paper notes that attaining and sustaining the GDP growth rates indicated above in terms of resources and policy reforms, is a monumental task.

Definitions and Basic Stylized Facts
Financial globalization and financial integration are, in principle, different concepts. Financial globalization is an aggregate concept that refers to increasing global linkages created through cross-
border financial flows. Financial integration refers to an individual country's linkages to international capital markets. Clearly, these concepts are closely related. For instance, increasing financial globalization is perforce associated with increasing financial integration on average. In this paper, therefore, the two terms are used interchangeably.
Of more relevance for the purposes of this paper is the distinction between de jure financial integration, which is associated with policies on capital account liberalization, and actual capital flows. For example, indicator measures of the extent of government restrictions on capital flows across national borders have been used extensively in the literature. On the one hand, using this measure, many countries in Latin America would be considered closed to financial flows. On the other hand, the volume of capital actually crossing the borders of these countries has been large relative to the average volume of such flows for all developing countries. Therefore, on a de facto basis, these Latin American countries are quite open to global financial flows. By contrast, some countries in Africa have few formal restrictions on capital account transactions but have not experienced significant capital flows. The analysis in this paper will focus largely on de facto measures of financial integration, as it is virtually impossible to compare the efficacy of various complex restrictions across countries. In the end, what matters most is the actual degree of openness. However, the paper will also consider the relationship between de jure and de facto measures.
A few salient features of global capital flows are relevant to the central themes of the paper. First, the volume of cross-border capital flows has risen substantially in the last decade. There has been not only a much greater volume of flows among industrial countries but also a surge in flows from industrial to developing countries. Second, this surge in international capital flows to developing countries is the outcome of both "pull" and "push" factors. Pull factors arise from changes in policies and other aspects of opening up by developing countries. These include liberalization of capital accounts and domestic stock markets, and large-scale privatization programs. Push factors include business-cycle conditions and macroeconomic policy changes in industrial countries. From a longer-term perspective, this latter set of factors includes the rise in the importance of institutional investors in industrial countries and demographic changes (for example, the relative aging of the population in industrial countries). The importance of these factors suggests that notwithstanding temporary interruptions during crisis periods or global business-cycle downturns, the past twenty years have been characterized by secular pressures for rising global capital flows to the developing world.
Another important feature of international capital flows is that the components of these flows differ markedly in terms of volatility. In particular, bank borrowing and portfolio flows are substantially more volatile than foreign direct investment. Although accurate classification of capital flows is not easy, evidence suggests that the composition of capital flows can have a significant influence on a country's vulnerability to financial crises.

Health
Major concerns of malaria, HIV/AIDS, pneumonia, tuberculosis, maternal and infant mortality are prevalent. A survey of 2008 shows that life expectancy at birth had reached the highest of 55 years and infant mortality rate was 67 per 100 live births while the infant mortality rate for children under age five was 104 per 1000 lives (Tanzania WB). The NGOs interviewed also had programs that are directed at providing supplements, raising awareness of anemia among child-bearing women, increasing access to underserved populations for primary eye-care, working to eliminate trachoma, and to develop school health programs. In addition, efforts are being made to develop the quality of health services by improving the knowledge of health practitioners.
Nongovernmental organizations play an increasingly important role in the development cooperation. They can bridge the gap between government and the community. Community-based organizations are essential in organizing poor people, taking collective action, fighting for their rights, and representing the interests of their members in dialogue with NGOs and government. NGOs, on the other hand, are better at facilitating the supply of inputs into the management process, mediating between people and the wider political party, networking, information dissemination and policy reform. By creating an enabling framework of laws, economic and political conditions, the State can play a fundamental role in helping NGOs and CBOs to play their roles more effectively and as a result increase the access to infrastructure services for the urban poor. Partnerships between all groups should be achieved without ignoring each other’s strengths but make use of each others’ comparative advantage. The strength of NGOs, particularly those operating at the field level, is their ability to form close linkages to local communities, and to engender community ownership and participation in development efforts. NGOs often can respond quickly to new circumstances and can experiment with innovative approaches. NGOs can identify emerging issues, and through their consultative and participatory approaches can identify and express beneficiary views that otherwise might not be heard.
NGOs often are successful intermediaries between actors in the development arena, building bridges between people and communities on one side, and governments, development institutions, and donors and development agencies on the other. In an advocacy role, NGOs frequently represent issues and views important in the dynamics of the development process.

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Chapter two
2.1 Linkages and inter-linkages between finance and development Inter-linkages and Financing While the Brundtland report is most often remembered for its focus on framing sustainable development as “environmental protection geared towards the sustainability of development goals,” the report also emphasized the need for a “significant increase in financial support from international sources.” The Brundtland report initiated serious discussions about how funds might best be generated and channeled. At the 1992 UN Conference on Environment and Development (UNCED, or Rio Earth Summit) in Rio de Janeiro, one of the most contentious deliberations focused on finance. One particular aspect of this debate centered on whether industrialized countries should pay some of the costs of sustainable development, and MEA implementation, in developing countries. The rationale behind the affirmative side of this debate is that the incorporation of environmental concerns into development efforts increases the costs of development in a way that developed nations did not experience. Also, developed countries continue to put more pressure on the global environment through their more extensive production and consumption. The higher level of resources in developed countries in the form of wealth, knowledge, and technology also puts them in a better position to finance sustainable development and MEA implementation. This view is encapsulated in Principle 7 of the Rio Declaration on Environment and Development, which stressed differentiated responsibilities among nations in pursuing sustainable development. During UNCED negotiations, developing countries demanded that any funding for sustainable development projects be in addition to, or on top of, existing official development assistance (ODA). This demand was raised by developing countries prior to UNCED, and has been raised many times since (Jordan, 1994). Developed countries balked at this demand, however, and overall ODA Inter-linkages in Financing Sustainable Development 5 has decreased since 1992, despite commitments at UNCED to achieve the previously targeted 0.7 percent of developed country GDP. Even as the UNCED process was still underway, difficulties were anticipated in regard to the raising of funds for sustainable development implementation. As a result, Chapter 33 of Agenda 21 (the text negotiated) suggests that UNCED should “identify ways and means of providing new and additional financial resources, particularly to developing countries, for environmentally sound development programmes and projects…” The euphoria generated during the UNCED negotiations dissipated soon after the Summit ended and as decision makers tried to come to terms with the difficulties of resolving the $300 billion price tag that had been put on the implementation of Agenda 21. Since that time, the challenge of financing sustainable development on the global level has only worsened. The policy context within with this challenge is being met has also become much more complicated since the Rio Earth Summit. The institutional context of global environmental financing dramatically transformed in the 1990s.

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1.1.2 Corporate Finance
Corporate finance consists of the financial activities related to running a corporation, usually with a division or department set up to oversee the financial activities. For example, a large company may have to decide whether to raise additional funds through a bond issue or stock offering. Investment banks may advise the firm on such considerations and help them market the securities. Startups may receive capital from angel investors or venture capitalists in exchange for a percentage of ownership. If a company thrives and decides to go public, it will issue shares on a stock exchange in an initial public offering (IPO) to raise cash. Another instance could be a company that is trying to budget their capital and make decisions on what projects to finance and what projects to put on hold in order to grow the company. These types of decisions fall under corporate finance.

1.1.3 Public Finance
Public finance includes tax, spending, budgeting and debt issuance policies that all affect how a government pays for the services it provides to the public.
The federal government helps prevent market failure by overseeing the allocation of resources, distribution of income and stabilization of the economy. Regular funding is secured mostly through taxation. Borrowing from banks, insurance companies and other governments also help finance the government.
In addition to managing money for its day-to-day operations, a government body also has larger social responsibilities. Its goals include attaining an equitable distribution of income for its citizens and enacting policies that lead to a stable economy.

CHAPTER FOUR
OTHER FINANCIAL ASPECTS OF DEVELOPMENT
(i) Legal roots originally put forward by La Porta et al (1997)
(ii) First endowments, politics and economic institutions (Acemoglu et al, 2001; Acemoglu et al, 2004).
(iii) Incumbents and openness
The Legal Roots
The legal origins puts forward the idea that common law based systems, are better suited than civil law based systems, for the development of capital markets. This is because civil law evolved to protect private property from the authority while common law was developed with the aim of addressing corruption of the judiciary and enhancing the powers of the state. Consequently, it is argued that capital markets developed faster in countries with common law systems than in those with civil law systems. We may therefore conclude that while there is a broad consensus that a properly functioning legal system that provides effective protection for investors‟ property rights is important for financial development (and growth), the legal origins view is not widely accepted, indeed it has been largely discredited by lawyers.
First Endowments, Politics and Economic Institutions
These contributions, acknowledge the importance of strong institutions for economic growth, but do not focus on financial development per se. They ascribe institutional quality differences to varying initial endowments and dynamic political economy factors.
The initial endowment hypothesis suggests that the disease environment encountered by a country can be a major obstacle for the establishment of institutions that would promote long run prosperity. Thus, it is argued that European colonial powers established extractive institutions that are unsuitable for long-term growth where the environment was unfavourable and institutions that were better suited for growth where they encountered favourable environments. The economic institutions hypothesis addresses the main shortcoming of the endowment hypothesis, by proposing a dynamic political economy framework in which differences in economic institutions are the fundamental causes of differences in economic development. Economic institutions, which determine the incentives and constraints of economic agents, are social decisions that are chosen for their consequences. Political institutions and income distribution are the dynamic forces that combine to shape economic institutions and outcomes. It is argued that growth promoting economic institutions emerge when political institutions (a) allocate power to groups with interests in broad based property rights enforcement, (b) create effective constraints on power holders and (c) when there are few rents to be captured by power holders.

DEVELOPMENT FINANCE IN NIGERIA
Development financing is one of the requirements for sustainable economic growth in any economy. The supply of finance to various sectors of the economy will promote the growth of the economy in a holistic manner and this, will make development, welfare improvement to proceed at a faster rate. The Central Bank of Nigeria development finance initiatives involve the formulation and implementation of various policies, innovation of appropriate products and creation of enabling environment for financial institutions to deliver services in an effective, efficient and sustainable manner. The initiatives are mainly targeted at agricultural sector, rural development and micro, small and medium enterprises.
SOURCES OF FINANCE FOR DEVELOPMENT IN NIGERIA
Most of the world's nations lack investment funds that could promote economic development – funds needed to build roads, schools, clinics and factories. As a result, their economies languish and their populations remain poor. In March 2002, the United Nations held an International Conference on Financing for Development to address this problem. The conference focused on six different sources for development funds – domestic resources (such as savings and taxation), foreign direct investment, international trade, international aid, debt relief, and finally systemic reforms. NGOs and others independent voices proposed alternative sources of financing, including especially global taxes and fees. Below are some measures of sourcing development funds:
Foreign aid: This provides a key element of development financing. For many of the poorest countries, official development assistance (ODA) represents the largest source of external financing. ODA can support a country's education, health, public infrastructure, agricultural and rural development. But only a handful of rich countries meet the UN target of giving 0.7% of their gross national product in international assistance. Further, donors often "tie" aid by requiring that it be spent on exports from the donor. Aid also often has political strings attached and it may be used to promote local business interests of the donor, not the real development needs of the recipient. This page posts articles on these and other aspects of international aid and development.

CHAPTER THREE
GOVERNMENT FINANCING
Public finance is the study of the role of the government in the economy. It is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones. The purview of public finance is considered to be threefold: governmental effects on (1) efficient allocation of resources, (2) distribution of income, and (3) macroeconomic stabilization. The proper role of government provides a starting point for the analysis of public finance. In theory, under certain circumstances, private markets will allocate goods and services among individuals efficiently (in the sense that no waste occurs and that individual tastes are matching with the economy's productive abilities). Market failure occurs when private markets do not allocate goods or services efficiently. The existence of market failure provides an efficiency-based rationale for collective or governmental provision of goods and services. Externalities, public goods, informational advantages, strong economies of scale, and network effects can cause market failures. Public provision via a government or a voluntary association, however, is subject to other inefficiencies, termed government failure. Public finance is closely connected to issues of income distribution and social equity. Governments can reallocate income through transfer payments or by designing tax systems that treat high-income and low-income households differently. The public choice approach to public finance seeks to explain how self-interested voters, politicians, and bureaucrats actually operate, rather than how they should operate.
SOURCES OF GOVERNMENT FINANCE
Government revenue is one of the major components of public finance. It refers to the income or receipts of the government. The government collects revenue from various sources because it has to spend on various sectors of the economy to stimulate the economic development. Generally, tax revenue and non-tax revenue are considered as the sources of government revenue. But in a broader sense, the government also receives revenue from foreign aid.
Sources of government revenue include charges, fees and earnings, fines, seignorage and debt, regulatory taxes and general taxes.

1990s. The starting point is that financial markets and institutions may arise to ameliorate
problems created by information and transaction frictions. Financial systems serve the
primary function of facilitating the allocation of resources across space and time in an
uncertain environment. These financial functions are expected to affect economic growth
through capital accumulation and technological innovation. Levine’s framework helped
guide subsequent empirical research that tested the relationship between finance and growth.
Defined in this way, these functions help to justify the view that the financial sector operates
like the “brain of the economy”(World Bank, 2001). 2. What does the empirical evidence
reveal about the connection between financial development and growth?
Ø Does the impact of finance vary by size or type of firm or industry?
Firms finance themselves in various ways. Some use more external finance than others so
the banking structure can have a greater impact on them. Rajan and Zingales (1998)
classified firms in 36 manufacturing sectors in more than 40 countries according to their use
of external finance as reflected in U.S firms. They concluded that industries more dependent
on external finance grow faster in more financially developed countries. The effect of
financial development occurs mostly through growth in the number of establishments rather
than through growth in average size of establishment.
Cetorelli and Gambera (2001) extended that analysis to test how measures of bank concentrati
on affect the growth of firms. Their results revealed that industries in which young firms are
more dependent on external finance grow faster in those countries in which the banking
system is more concentrated. The depressive effect of banking concentration on growth,
therefore, may be offset by the positive effect on specific industries. If these results are found
to be robust under additional testing, the implication is that there is no optimum banking
market structure. Banking can have an impact on technological progress if it facilitates credit
access to younger firms that are more likely to introduce innovative technologies. In this way
the banking market structure may actually contribute to shaping industrial structure and the
cross-industry size distribution of firms by providing finance to firms that grow more quickly.
Although efficient legal and financial systems can be a significant determinant of the
financing of firms, it is not clear which aspects of financial and legal development are most
significant and how they affect firms of different sizes. Beck, Demirguc-Kunt and
Maksimovic (2002) used data from a sample of over 4,000 firms in 54 countries to test if the

The Following Are The Linkages Or Relationship Between Finance And Development.
I. Savings-investment relationship
To attain economic development, a country needs more investment and production. This can happen only when there is a facility for savings. As, such savings are channelized to productive resources in the form of investment. Here, the role of financial institutions is important, since they induce the public to save by offering attractive interest rates. These savings are channelized by lending to various business concerns which are involved in production and distribution.
2. Finance help in growth of capital market
Any business requires two types of capital namely, fixed capital and working capital. Fixed capital is used for investment in fixed assets, like plant and machinery. While working capital is used for the day-to-day running of business. It is also used for purchase of raw materials and converting them into finished products.
Fixed capital is raised through capital market by the issue of debentures and shares. Public and other financial institutions invest in them in order to get a good return with minimized risks.
For working capital, we have money market, where short-term loans could be raised by the businessmen through the issue of various credit instruments such as bills, promissory notes, etc.
Foreign exchange market enables exporters and importers to receive and raise funds for settling transactions. It also enables banks to borrow from and lend to different types of customers in various foreign currencies. The market also provides opportunities for the banks to invest their short term idle funds to earn profits. Even governments are benefited as they can meet their foreign exchange requirements through this market.
3. Government Securities market
Finance enables the state and central governments to raise both short-term and long-term funds through the issue of bills and bonds which carry attractive rates of interest along with tax concessions. The budgetary gap is filled only with the help of government securities market. Thus, the capital market, money market along with foreign exchange market and government securities market enable businessmen, industrialists as well as governments to meet their credit requirements. In this way, the development of the economy is ensured by the financial system.

determinants of productivity growth. Stated goals of the liberalization package were to enhance labor productivity and employment growth. Outside the consistently expanding economies, this did not happen. Productivity movements across sectors differed in detail in the slow-growing and stagnant regions but, in general, did not add up to very much. Also, overall, liberalization did not help create jobs – industrial jobs in particular. Rather, it increased underemployment, which was absorbed most frequently in informal service activities and, in a few cases, in agriculture. The associated fall in productivity, which is quite common in the service sector in low-growth economies, indicates that poor productivity performance was more an effect than a cause of poor GDP growth.
This leads to a fourth stylized fact: productivity growth is as much a result as a cause of economic growth, largely because demand matters not only for short but also for long-term growth.
Taxes and other public resources are the largest source of finance for development
The European Report on Development shows us that the vast bulk of the funds for development in developing countries comes first and foremost from their own domestic tax revenue, followed by domestic private finance. Then think of China, which helped the world meet Millennium Development Goal 1 (halving global poverty by 2015) by targeting poverty at home with domestic public funds and domestic private capital.
We need a completely new approach towards financing international development: We have learned a lot in implementing the Millennium Development Goals over the last 15 years. There is a need to go deeper and look at what really drives or enables development if you want transformative change. Again, the European Report on Development highlights six examples of enablers that, if well managed and funded, can promote transformative development – local governance, infrastructure, human capital, green energy technology, biodiversity and trade. These enablers combine economic, social and environmental dimensions.
Finance alone will not be sufficient to achieve the post-2015 development agenda: Policies also matter. In fact, policies are fundamental. 6 country illustrations were undertaken for the European Report on Development in places where transformative change had occurred and identified a range of specific policies that help to mobilize finance – like regulatory reforms, building administrations, tax reforms and incentives for foreign direct investment.
The role of Official Development Assistance is changing: Outside the focus of the European Report on Development, but very much interlinked to some of the its key messages is the ongoing debate about aid effectiveness. Let us take the example of the EU which is the world’s biggest donor of Official Development Assistance (ODA). While this assistance will still have a place in international cooperation in the years to come, there are many challenges ahead for the EU’s support to developing and fragile states.

Stylized Facts
The first stylized fact that comes out from our analysis is that convergence in income levels among countries is the exception rather than the rule. This conclusion contrasts with the prediction of convergence – either in absolute or conditional form — that characterizes most orthodox models of economic growth. Indeed, divergent economic performance has been the major characteristic of the evolution of the income per capita between industrial and developing countries over the past two centuries. This phenomenon came back with force in the late 1970s, giving rise to a “great divergence” in the incomes of industrial and developing countries that characterized the last two decades of the twentieth century. This was accompanied by very uneven growth among different developing countries, with the success stories of East and South Asia coinciding with the poor performance of most of the developing world.
The late twentieth century divergence was associated with clustering of growth collapses (reduction in income per capita over several years), in sharp contrast to the clustering of success stories during both the post-war “golden age” and the recent 2003-2007 boom. The clustering in time of both successes and collapses underscores a second stylized fact: international factors play a crucial role in the overall growth dynamics of the developing world. Again, this finding contrasts with the emphasis on domestic policies and institutions as the 2 basic determinant of economic growth that characterizes mainstream analysis and, in particular, its numerous massive cross country econometric exercises (in which, with a few exceptions, international conditions are entirely absent from the analysis).

There is no universally accepted definition of what a developing country is; neither is there one of what constitutes the process of economic development. Developing countries are usually categorized by a per capita income criterion, and economic development is usually thought to occur as per capita incomes rise. A country’s per capita income (which is almost synonymous with per capita output) is the best available measure of the value of the goods and services available, per person, to the society per year. Although there are a number of problems of measurement of both the level of per capita income and its rate of growth, these two indicators are the best available to provide estimates of the level of economic well-being within a country and of its economic growth. It is well to consider some of the statistical and conceptual difficulties of using the conventional criterion of underdevelopment before analyzing the causes of underdevelopment. The statistical difficulties are well known. To begin with, there are the awkward borderline cases. Even if analysis is confined to the underdeveloped and developing countries in Asia, Africa, and Latin America, there are rich oil countries that have per capita incomes well above the rest but that are otherwise underdeveloped in their general economic characteristics. Second, there are a number of technical difficulties that make the per capita incomes of many underdeveloped countries (expressed in terms of an international currency, such as the U.S. dollar) a very crude measure of their per capita real income. These difficulties include the defectiveness of the basic national income and population statistics, the inappropriateness of the official exchange rates at which the national incomes in terms of the respective domestic currencies are converted into the common denominator of the U.S. dollar, and the problems of estimating the value of the noncash components of real incomes in the underdeveloped countries. Finally, there are conceptual problems in interpreting the meaning of the international differences in the per capita income levels.

resources by companies to environmental and social affairs. Companies are taking responsibility for their externalities and reporting on the impact of their activities on a range of stakeholders.
Although it is often assumed that NGOs are charities or enjoy non-profit status, some NGOs are profit-making organizations such as cooperatives or groups which lobby on behalf of profit-driven interests. For example, the World Trade Organization's definition of NGOs is broad enough to include industry lobby groups such as the Association of Swiss Bankers and the International Chamber of Commerce. Such a broad definition has its critics. It is more common to define NGOs as those organizations which pursue some sort of public interest or public good, rather than individual or commercial interests. Even then, the NGO community remains a diverse constellation. Some groups may pursue a single policy objective – for example access to AIDS drugs in developing countries or press freedom. Others will pursue more sweeping policy goals such as poverty eradication or human rights protection.
However, one characteristic these diverse organizations share is that their non-profit status means they are not hindered by short-term financial objectives. Accordingly, they are able to devote themselves to issues which occur across longer time horizons, such as climate change, malaria prevention or a global ban on landmines. Public surveys reveal that NGOs often enjoy a high degree of public trust, which can make them a useful – but not always sufficient – proxy for the concerns of society and stakeholders. Not all NGOs are amenable to collaboration with the private sector. Some will prefer to remain at a distance, by monitoring, publicizing, and criticizing in cases where companies fail to take seriously their impacts upon the wider community. However, many are showing a willingness to devote some of their energy and resources to working alongside business, in order to address corporate social responsibility.

The implementation of service delivery by NGOs is important simply because many people in developing countries face a situation in which a wide range of vital basic services are unavailable or of poor quality (Carroll 1992). There has been a rapid growth in NGO service provision, as neoliberal development policies have emphasized a decreasing role for governments as direct service providers. In many parts of the developing world, government services have been withdrawn under conditions which have been dictated by the World Bank and other donors, leaving NGOs of varying types and with capacities and competence of varying quality to pick up the peices. The motivation for an NGO to become involved in providing services may vary. Sometimes it does so in order to meet previously unmet needs, while at other times an NGO is ‘contracted’ by the government (or by a donor, or a company) to take over the delivery of services which were formerly provided by government. Not all NGOs provide services directly to local communities. Some seek to tackle poverty indirectly by providing other forms of services, such as giving training to other NGOs, government or the private sector, or undertaking applied research as a commission, or providing specialized inputs such as conflict-resolution training. The ‘good governance’ agenda has emphasized a more flexible provision of services through using a range of private sector and nongovernmental actors. As Brett (1993) points out, NGOs exist as actors within a broader, pluralistic organizational universe, alongside the state and private sector, which has the potential to expand the range of institutional choices open to governments and to communities. In some contexts, such as the UK, this has become known as the purchaser–provider split in which the government is responsible for purchasing the services which are to be supplied, but then contracts another agency to actually provide them. Some donors have argued for a stronger role for NGOs in service delivery work because they are believed to possess a set of distinctive organizational capacities and comparative advantages, such as flexibility, commitment and cost-effectiveness Yet in practice, the diversity of NGOs as organizations means that such generalizations are often difficult to sustain. While some NGOs have proved themselves to be highly effective service providers in certain sectors and contexts, others are found to perform poorly. For example, Robinson and White (1997) found that NGO service provision was frequently characterized by problems of quality control, limited sustainability, poor coordination and general amateurism. It may be the desire to cut costs, rather than an interest in improving effectiveness, that lies at the heart of a decision to make greater use of NGOs to deliver a particular service. For every case of an effective NGO, it is usually possible to point to another NGO which has high administrative overheads, poor management and low levels of effectiveness. Nor are such organizational characteristics fixed or innate. Seckinelgin (2006) has argued that, while some HIV/AIDS NGOs have become attractive partners for donors in Africa because of their closeness to local NGOs as watchdogs
Another key role for NGOs is to act as monitors which can, in Najam’s (1999: 152) phrase, ‘keep policy honest’.

introduced here.
Social exclusion
Originating from work on social policy and poverty in industrialized countries, the concept of social exclusion has come to be incorporated into development theory in some quarters. As an approach to understanding poverty, it shifts attention away from simple economic measurements of poverty, to focus on the processes which produce it and the capacity of people to operationalize their rights to social and economic well-being. As Kabeer (2004: 2) writes, the value of social exclusion is in offering an integrated way of looking at different forms of disadvantage which have tended to be dealt with separately … In particular it captures the experiences of the certain groups and categories in a society of somehow being ‘set apart’ from others, of being ‘locked-out’ or ‘left behind’ in a way that the existing frameworks for poverty analysis had failed to capture. What is relevant to NGOs is that the framework of social exclusion draws attention to the need for appropriate institutional responses to social disadvantage which can address causes as well as outcomes, and the problem that, as De Haan (2007: 134) points out, ‘a dominant neo-liberal ideological framework tends to reduce state responsibility in poverty alleviation, reduction of inequalities and social integration’. It also serves to underline for NGOs the importance of working, beyond simply service delivery, to rights-based approaches that can strengthen the voices of people who find themselves excluded from policy and political processes.
Social capital
NGOs have also been associated with the concept of ‘social capital’, which began to find its way into development policy debates from the mid 1990s. One of its best-known theorists is Robert Putnam (1993: 167), who uses the term to refer to the relationships of trust and civic responsibility that can accumulate among members of a community over a long period of time:
Social capital … refers to features of social organization, such as trust, norms [of reciprocity] and networks [of civic engagement], that can improve the efficiency of society by facilitating co-ordinated actions.
Through participating in both formal groups and informal networks, an awareness of the greater good develops. For Putnam, social capital is also integrative beyond the private self-interest of kin-based groups which may restrict wider norms of trust and cooperation. Yet the term is understood differently by different theorists. Coleman (1990: 300) includes kin within his more general definition of social capital, as ‘the set of resources that inhere in family relations and in community social organization’, linking the concept back to theories of institutionalism and trust.
Social movements
A discussion of NGOs and development theory also needs to consider the field of social movements, already touched upon above in connection with ‘post-development’. Like NGOs, social movements may reflect the desire on the part of citizens to gain better access to modernity in the form of economic or social rights or welfare services through strengthened citizenship and civil society participation, but they may also take the form of movements which question and resist the global hegemonies of industrial growth, market capitalism and administrative power. The wide-ranging literature on social movements sometimes makes a distinction between longstanding or ‘classical’ social movements such as the trade unions and cooperatives, and ‘new’ social movements, which have included feminism, indigenous people and other forms of identity-based struggle.

CRITICALLY DISCUSS THE CONCEPT OF NON GOVERNMENTAL ORGANISATIO (NGO) AND THEIR IMPACT ON DEVELOPMENT
A non-governmental organization (NGO) is a non-profit, citizen-based group that functions independently of government. NGOs, sometimes called civil societies, are organized on community, national and international levels to serve specific social or political purposes, and are cooperative, rather than commercial, in nature. Non-governmental organizations (NGOs) are high-profile actors in the field of international development, both as providers of services to vulnerable individuals and communities and as campaigning policy advocates. This book provides a critical introduction to the wide-ranging topic of NGOs and development. Written by two authors with more than 20 years’ experience each of research and practice in the field, the book combines a critical overview of the main research literature with a set of up-to-date theoretical and practical insights drawn from experience in Asia, Europe, Africa and elsewhere.
Two broad groups of NGOs are identified by the World Bank:
• Operational NGOs, which focus on development projects.
• Advocacy NGOs, which are organized to promote particular causes.
Certain NGOs may fall under both categories simultaneously. Examples of NGOs include those that support human rights, advocate for improved health or encourage political participation.
While the term "NGO" has various interpretations, it is generally accepted to include private organizations that operate without government control and that are non-profit and non-criminal. Other definitions further clarify NGOs as associations that are non-religious and non-military. Some NGOs rely primarily on volunteers, while others support a paid staff.
How NGOs are Funded
As non-profits, NGOs rely on a variety of sources for funding, including:
• membership dues
• private donations
• the sale of goods and services
• grants

These contributions, acknowledge the importance of strong institutions for economic growth, but do not focus on financial development per se. They ascribe institutional quality differences to varying initial endowments and dynamic political economy factors.
The initial endowment hypothesis suggests that the disease environment encountered by a country can be a major obstacle for the establishment of institutions that would promote long run prosperity. Thus, it is argued that European colonial powers established extractive institutions that are unsuitable for long-term growth where the environment was unfavourable and institutions that were better suited for growth where they encountered favourable environments. The economic institutions hypothesis addresses the main shortcoming of the endowment hypothesis, by proposing a dynamic political economy framework in which differences in economic institutions are the fundamental causes of differences in economic development. Economic institutions, which determine the incentives and constraints of economic agents, are social decisions that are chosen for their consequences. Political institutions and income distribution are the dynamic forces that combine to shape economic institutions and outcomes
OTHER FINANCIAL ASPECT OF DEVELOPMENT
The legal origins puts forward the idea that common law based systems, are better suited than civil law based systems, for the development of capital markets. This is because civil law evolved to protect private property from the authority while common law was developed with the aim of addressing corruption of the judiciary and enhancing the powers of the state. Consequently, it is argued that capital markets developed faster in countries with common law systems than in those with civil law systems. The view that common-law countries have better shareholder protection than civil law countries has been challenged in an important recent study. At such finances are used to developed sound legal system that will eradicate all forms of inefficiency in the market systems. This aspect of financial development has to do with the establishment of sound institutional system that will ensure that the right of everyone is protected. Unlike the civil laws that seek to satisfy the objective of those in power, this aspects of financial development advocates the funding of projects that will look into the origins of different laws that coordinate the production, consumption, and distribution system in every economy, so as to ensure the equitable distribution of resources in the society.

DISCUSS OTHER FINANCIAL ASPECTS OF DEVELOPMENT
BORROWING
Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.
As the government represents the people, government debt can be seen as an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.
Most government budgets are calculated on a cash basis, meaning that revenues are recognized when collected and outlays are recognized when paid. Some consider all government liabilities, including future pension payments and payments for goods and services the government has contracted for but not yet paid, as government debt. This approach is called accrual accounting, meaning that obligations are recognized when they are acquired, or accrued, rather than when they are paid. This constitutes public debt.
SEIGNIORAGE
Seigniorage is the net revenue derived from the issuing of currency. It arises from the difference between the face value of a coin or bank note and the cost of uproducing, distributing and eventually retiring it from circulation. Seigniorage is an important source of revenue for some national banks, although it provides a very small proportion of revenue for advanced industrial countries.
Government expenditures
Economists classify government expenditures into three main types. Government purchases of goods and services for current use are classed as government consumption. Government purchases of goods and services intended to create future benefits – such as infrastructure investment or research spending – are classed as government investment. Government expenditures that are not purchases of goods and services, and instead just represent transfers of money – such as social security payments – are called transfer payments.

DISCUSS GOVERNMENT FINANCING, ITS SOURCES AND DISCUSS DEVELOPMENT FINANCING IN NIGERIA AND THEIR SOURCES
OVERVIEW OF GOVERNMENT FINANCING
The proper role of government provides a starting point for the analysis of public finance. In theory, under certain circumstances, private markets will allocate goods and services among individuals efficiently (in the sense that no waste occurs and that individual tastes are matching with the economy's productive abilities). If private markets were able to provide efficient outcomes and if the distribution of income were socially acceptable, then there would be little or no scope for government. In many cases, however, conditions for private market efficiency are violated. For example, if many people can enjoy the same good at the same time (non-rival, non-excludable consumption), then private markets may supply too little of that good. National defence is one example of non-rival consumption, or of a public good. "Market failure" occurs when private markets do not allocate goods or services efficiently. The existence of market failure provides an efficiency-based rationale for collective or governmental provision of goods and services. Externalities, public goods, informational advantages, strong economies of scale, and network effects can cause market failures. Public provision via a government or a voluntary association, however, is subject to other inefficiencies, termed "government failure." Under broad assumptions, government decisions about the efficient scope and level of activities can be efficiently separated from decisions about the design of taxation systems (Diamond-Mirlees separation). In this view, public sector programs should be designed to maximize social benefits minus costs (cost-benefit analysis), and then revenues needed to pay for those expenditures should be raised rational investors would apply risk and return to the problem of an investment policy. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), and to the Black–Scholes theory for option valuation; it further studies phenomena and models where these assumptions do not hold, or are extended. "Financial economics", at least formally, also considers investment under "certainty" (Fisher separation theorem, "theory of investment value", Modigliani–Miller theorem) and hence also contributes to corporate finance theory. Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize the relationships suggested.
Although they are closely related, the disciplines of economics and finance are distinct. The “economy” is a social institution that organizes a society’s production, distribution, and consumption of goods and services, all of which must be financed.
Financial mathematics

A CRITICAL ANALYSIS OF THE LINKAGES AND INTER-LINKAGES BETWEEN FINANCE AND DEVELOPMENT
How does the structure and growth of the financial sector in a country affect the growth and development of its economy? How is the rural economy affected by improved access to financial services? What are the results of the new emphasis on improving the access of the poor to microfinance services? An explosion of empirical research in recent years provides new information that I use in this survey paper to address these issues. Many of the publications cited concerning the cross-country analysis of financial systems were based on the analysis of new multi-country data sets recently created covering the period 1960 to 1997.1 A recent AID conference on rural finance also provided important information summarizing the state of the art.
Questions about the relationship between finance and economic development
How have economists’ views evolved over time regarding the relationship between the financial system and growth?
Historically, economists have held strikingly different views about the importance of the financial system for economic growth (Levine, 1997). On the one hand, John Hicks argued that it played a critical role in England’s industrialization, while Joseph Schumpeter reasoned that well-functioning banks spurred technological innovation by identifying and funding the most innovative entrepreneurs. On the other hand, Joan Robinson felt that where enterprise led, then finance would follow. Levine observed that the pioneers of development economics often did not even mention finance in their work. Gurley and Shaw (1960) identified contributions that finance makes to the economy and Patrick (1966) observed that some countries pursued supply-leading policies which were intended to accelerate growth by expanding the financial system. Goldsmith (1969) is credited with being the first to document the growth in financial activities that occurs with overall growth in the economy, but he hesitated to conclude the direction of causality: Were financial factors responsible for accelerating economic development or did financial development reflect economic growth? Shaw (1973) and McKinnon (1973) were the first to describe how controls and regulations contributed to financial repression, which negatively affects economic growth. Their models were narrowly focused on money, although their descriptive narratives were broader. For example, McKinnon noted the importance of finance by using the example of technology adoption by farmers. He thought economic growth would be slowed without efficient finance because it would be virtually impossible for farmers to self-finance the needed investment to speedily adopt new technologies. Wachtel (2001) noted that McKinnon forcefully argued for financial liberalization and, by 1990, concluded that “there is widespread agreement that flows of saving and investment should be voluntary and significantly decentralized in an open capital market at close to equilibrium interest rates”

DISCUSSING THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACT FINANCE:
Global and domestic stylized facts on development
Financing for development is focused on new stakeholders in the financing of development cooperation. This is one of the most important UN approaches to supporting poor countries' financing of development and poverty reduction ¬- a necessity when official development assistance is no longer sufficient. The world is moving forward in many different areas, but to achieve the Global Goals for Sustainable Development, which define a sustainable world free from extreme poverty, we must mobilize resources from many different sources other than traditional state aid. The concept of "Financing for Development" was first adopted at a UN conference in Mexico in 2002. Today's development financing is primarily concerned with the financing of the Global Goals for Sustainable Development in low-income countries. When working with these goals, development financing plays a far more important role than in the previous work on the Millennium Development Goals. Financing for development is one of the most important UN approaches to support poor countries' financing of their development and the fight against poverty. The idea is to identify and coordinate new actors that can contribute to development both financially and with their expertise and competence. In order to reach the enormous sums that are required for a truly sustainable development, both private and public capital flows, other than official development assistance, must be involved. We need to engage actors such as banks, insurance companies and private donors while also working to develop tax systems in developing countries, which in many ways represent a huge potential resource. Official development assistance (ODA) remains the basis for the financing of development cooperation with development financing as a supplement. Sweden is working for all rich countries to live up to the agreement to designate at least 0.7 per cent of their gross national income (GNI) to development cooperation. At present, only a few countries meet this goal, among them Sweden. When traditional aid is combined with development financing there is an increase in total resources and also the probability of eradicating poverty. In several countries, including Germany, the UK and the Netherlands, financing for development is gradually being integrated into development cooperation. The supranational organization OECD as well as private and philanthropic actors have also begun working with development financing. Sida has been working with a series of projects in this area since 2014. Finance alone will not be sufficient to achieve the post-2015 development agenda: Policies also matter. In fact, policies are fundamental. 6 country illustrations were undertaken for the European Report on Development in places where transformative change had occurred and identified a range of specific policies that help to mobilize finance – like regulatory reforms, building administrations, tax reforms and incentives for foreign direct investment.

‘Active’ partnerships are those built through ongoing processes of negotiation, debate, occasional conflict, and learning through trial and error. Risks are taken, and although roles and purposes are clear they may change according to need and circumstance. ‘Dependent’ partnerships, on the other hand, have a blueprint character and are constructed at the project planning stage according to a set of rigid assumptions about comparative advantage and individual agency interests, often linked to the availability of outside funding. There may be consensus among the partners, but this often reflects unclear roles and responsibilities rather than the creative conflicts which emerge within active partnerships (Lewis 1998a). Partnership may bring extra costs, which are easily underestimated, such as new lines of communications requiring demands on staff time, vehicles and telephones; new responsibilities for certain staff; and the need to share information with other agencies. Evans (1996) argues that, rather than NGOs and government merely complementing each other’s work in a functional sense or engaging in competition with each other, a more useful ‘synergy’ can be created if the relationship between them becomes a mutually reinforcing one based on a clear division of labour and mutual recognition and acceptance of these roles observed that good progress with development in north-east Brazil was not based on the special strengths of any one particular type of organizational actor, but resulted instead from a complex, three-way dynamic between central government, local government and civil society.
NON-GOVERNMENTAL ORGANIZATIONS commonly referred to as NGOs, are usually non-profit and sometimes international organizations independent of governments and international governmental organizations (though often funded by governments) that are active in humanitarian, educational, health care, public policy, social, human rights, environmental, and other areas to effect changes according to their objectives. They are thus a subgroup of all organizations founded by citizens, which include clubs and other associations that provide services, benefits, and premises only to members. Sometimes the term is used as a synonym of "civil society organization" to refer to any association founded by citizens, but this is not how the term is normally used in the media or everyday language, as recorded by major dictionaries. The explanation of the term by NGO.org (the non-governmental organizations associated with the United Nations) is ambivalent. It first says an NGO is any non-profit, voluntary citizens' group which is organized on a local, national or international level, but then goes on to restrict the meaning in the sense used by most English speakers and the media: Task-oriented and driven by people with a common interest, NGOs perform a variety of service and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information. NGOs are usually funded by donations, but some avoid formal funding altogether and are run primarily by volunteers. NGOs are highly diverse groups of organizations engaged in a wide range of activities, and take different forms in different parts of the world. Some may have charitable status, while others may be registered for tax exemption based on recognition of social purposes. Others may be fronts for political, religious, or other interests. Since the end of World War II, NGOs have had an increasing role in international development,[ particularly in the fields of humanitarian assistance and poverty alleviation. The number of NGOs worldwide is estimated to be 10 million. Russia had about 277,000 NGOs in 2008. India is estimated to have had around 2 million NGOs in 2009, just over one NGO per 600 Indians, and many times the number of primary schools and primary health centres in India.

Service delivery
The implementation of service delivery by NGOs is important simply because many people in developing countries face a situation in which a wide range of vital basic services are unavailable or of poor quality (Carroll 1992). There has been a rapid growth in NGO service provision, as neoliberal development policies have emphasized a decreasing role for governments as direct service providers. In many parts of the developing world, government services have been withdrawn under conditions which have been dictated by the World Bank and other donors, leaving NGOs of varying types and with capacities and competence of varying quality to pick up the peices. The motivation for an NGO to become involved in providing services may vary. Sometimes it does so in order to meet previously unmet needs, while at other times an NGO is ‘contracted’ by the government (or by a donor, or a company) to take over the delivery of services which were formerly provided by government. Not all NGOs provide services directly to local communities. Some seek to tackle poverty indirectly by providing other forms of services, such as giving training to other NGOs, government or the private sector, or undertaking applied research as a commission, or providing specialized inputs such as conflict-resolution training. The ‘good governance’ agenda has emphasized a more flexible provision of services through using a range of private sector and nongovernmental actors. As Brett (1993) points out, NGOs exist as actors within a broader, pluralistic organizational universe, alongside the state and private sector, which has the potential to expand the range of institutional choices open to governments and to communities. In some contexts, such as the UK, this has become known as the purchaser–provider split in which the government is responsible for purchasing the services which are to be supplied, but then contracts another agency to actually provide them. Some donors have argued for a stronger role for NGOs in service delivery work because they are believed to possess a set of distinctive organizational capacities and comparative advantages, such as flexibility, commitment and cost-effectiveness Yet in practice, the diversity of NGOs as organizations means that such generalizations are often difficult to sustain. While some NGOs have proved themselves to be highly effective service providers in certain sectors and contexts, others are found to perform poorly. For example, Robinson and White (1997) found that NGO service provision was frequently characterized by problems of quality control, limited sustainability, poor coordination and general amateurism. It may be the desire to cut costs, rather than an interest in improving effectiveness, that lies at the heart of a decision to make greater use of NGOs to deliver a particular service. For every case of an effective NGO, it is usually possible to point to another NGO which has high administrative overheads, poor management and low levels of effectiveness. Nor are such organizational characteristics fixed or innate. Seckinelgin (2006) has argued that, while some HIV/AIDS NGOs have become attractive partners for donors in Africa because of their closeness to local.
NGOs as watchdogs
Another key role for NGOs is to act as monitors which can, in Najam’s (1999: 152) phrase, ‘keep policy honest’. This role may include the idea of being a whistle-blower if certain policies remain unimplemented or are carried out poorly, as well as scanning the policy horizon for events and activities which could interfere with future policy development and implementation. An example of this is the US-based NGO CorpWatch, which was founded in 1996.

Some NGOs were also seen as bringing a set of new and progressive development agendas of participation, gender, environment and empowerment that were beginning to capture the imagination of many development activists at this time. For other donors and some governments, concerned with the need to liberalize and roll back the state as part of structural adjustment policies (SAPs), NGOs were also seen as a cost-effective and efficient alternative to public sector service delivery. Structural adjustment was a condition of many of the loans provided by the World Bank and the IMF from the late 1970s onwards which obliged governments to reduce the role of the state in the running of the economy and the social sectors, to open up the economy to foreign investment and to reduce barriers to trade.
NGOs and contemporary development theory
Three other areas of current applied development theory are relevant to NGOs, and these are briefly introduced here.
Social exclusion
Originating from work on social policy and poverty in industrialized countries, the concept of social exclusion has come to be incorporated into development theory in some quarters. As an approach to understanding poverty, it shifts attention away from simple economic measurements of poverty, to focus on the processes which produce it and the capacity of people to operationalize their rights to social and economic well-being. As Kabeer (2004: 2) writes, the value of social exclusion is in offering an integrated way of looking at different forms of disadvantage which have tended to be dealt with separately … In particular it captures the experiences of the certain groups and categories in a society of somehow being ‘set apart’ from others, of being ‘locked-out’ or ‘left behind’ in a way that the existing frameworks for poverty analysis had failed to capture. What is relevant to NGOs is that the framework of social exclusion draws attention to the need for appropriate institutional responses to social disadvantage which can address causes as well as outcomes, and the problem that, as De Haan (2007: 134) points out, ‘a dominant neo-liberal ideological framework tends to reduce state responsibility in poverty alleviation, reduction of inequalities and social integration’. It also serves to underline for NGOs the importance of working, beyond simply service delivery, to rights-based approaches that can strengthen the voices of people who find themselves excluded from policy and political processes.
Social capital
NGOs have also been associated with the concept of ‘social capital’, which began to find its way into development policy debates from the mid 1990s. One of its best-known theorists is Robert Putnam (1993: 167), who uses the term to refer to the relationships of trust and civic responsibility that can accumulate among members of a community over a long period of time:
Social capital … refers to features of social organization, such as trust, norms [of reciprocity] and networks [of civic engagement], that can improve the efficiency of society by facilitating co-ordinated actions.
Through participating in both formal groups and informal networks, an awareness of the greater good develops. For Putnam, social capital is also integrative beyond the private self-interest of kin-based groups which may restrict wider norms of trust and cooperation. Yet the term is understood differently by different theorists. Coleman (1990: 300) includes kin within his more general definition of social capital, as ‘the set of resources that inhere in family relations and in community social organization’, linking the concept back to theories of institutionalism and trust.

Moving beyond money, Levine (1997) developed a comprehensive theoretical framework to explain how finance broadly defined can be conceptually linked to growth. This framework was used to organize his discussion regarding the explosion of research that emerged in the 1990s. The starting point is that financial markets and institutions may arise to ameliorate problems created by information and transaction frictions. Financial systems serve the primary function of facilitating the allocation of resources across space and time in an uncertain environment. These financial functions are expected to affect economic growth through capital accumulation and technological innovation. Levine’s framework helped guide subsequent empirical research that tested the relationship between finance and growth. Defined in this way, these functions help to justify the view that the financial sector operates like the “brain of the economy” (World Bank, 2001). 2. What does the empirical evidence reveal about the connection between financial development and growth?
Does the impact of finance vary by size or type of firm or industry?
Firms finance themselves in various ways. Some use more external finance than others so the banking structure can have a greater impact on them. Rajan and Zingales (1998) classified firms in 36 manufacturing sectors in more than 40 countries according to their use of external finance as reflected in U.S firms. They concluded that industries more dependent on external finance grow faster in more financially developed countries. The effect of financial development occurs mostly through growth in the number of establishments rather than through growth in average size of establishment.
Cetorelli and Gambera (2001) extended that analysis to test how measures of bank concentration affect the growth of firms. Their results revealed that industries in which young firms are more dependent on external finance grow faster in those countries in which the banking system is more concentrated. The depressive effect of banking concentration on growth, therefore, may be offset by the positive effect on specific industries. If these results are found to be robust under additional testing, the implication is that there is no optimum banking market structure. Banking can have an impact on technological progress if it facilitates credit access to younger firms that are more likely to introduce innovative technologies. In this way the banking market structure may actually contribute to shaping industrial structure and the cross-industry size distribution of firms by providing finance to firms that grow more quickly.
Although efficient legal and financial systems can be a significant determinant of the financing of firms, it is not clear which aspects of financial and legal development are most significant and how they affect firms of different sizes. Beck, Demirguc-Kunt and Maksimovic (2002) used data from a sample of over 4,000 firms in 54 countries to test if the firms’ responses to questions of perceived constraints in fact affect growth, measured by growth in firm sales, and if the effect was different by sizes of firms.5 The survey provided “information on whether collateral requirements, bank bureaucracies, the need to have special connections with banks, high interest rates, lack of money in the banking system, and access to different types of financing are troubling enough issues for firms to report as constraints” (p. 6). The firms were asked their opinions about what they find particularly constraining about the legal system and most troubling about corruption.

REFRENCES
https://www.investopedia.com/ask/answers/what is finance/

https://www.omicsonline.org/open-access/sources-of-public=funds-and-economic-prosperity-th-nigerian-case-2160234-1000215.php?aid=81299

https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government

https://finance.laws.com/global-development-what-you-need-to-know-74999
https://www.investopedia.com/terms/e/economicgrowth.asp

http://www.nigeriavillagesquare.com/articles/the-role-of-non-governmental-organizations-ngos-in-development.html

Examples of NGOs include those that support human rights, advocate for improved health or encourage political participation.
While the term "NGO" has various interpretations, it is generally accepted to include private organizations that operate without government control and that are non-profit and non-criminal. Other definitions further clarify NGOs as associations that are non-religious and non-military.
Some NGOs rely primarily on volunteers, while others support a paid staff.
How NGOs are funded
As non-profits, NGOs rely on a variety of sources for funding, including:
 Membership dues
 Private donations
 The sale of goods and services
 Grants
Despite their independence from government, some NGOs rely significantly on government funding. Large NGOs may have budgets in the millions or billions of dollars.
Types of NGOs
A number of NGO variations exist, including:
BINGO: business-friendly international NGO (example: Red Cross)
ENGO: environmental NGO (Greenpeace and World Wildlife Fund)
GONGO: government-organized non-governmental organization (International Union for Conservation of Nature)
INGO: international NGO (Oxfam)
QUANGO: quasi-autonomous NGO (International Organization for Standardization [ISO])
Roles of non-government organizations
Some of the roles of NGOs include;
Development and Operation of Infrastructure:
Community-based organizations and cooperatives can acquire, subdivide and develop land, construct housing, provide infrastructure and operate and maintain infrastructure such as wells or public toilets and solid waste collection services. They can also develop building material supply centres and other community-based economic enterprises. In many cases, they will need technical assistance or advice from governmental agencies or higher-level NGOs.
Supporting Innovation, Demonstration and Pilot Projects:
NGO have the advantage of selecting particular places for innovative projects and specify in advance the length of time which they will be supporting the project – overcoming some of the shortcomings that governments face in this respect. NGOs can also be pilots for larger government projects by virtue of their ability to act more quickly than the government bureaucracy.

Income distribution
Some forms of government expenditure are specifically intended to transfer income from some groups to others. For example, governments sometimes transfer income to people that have suffered a loss due to natural disaster. Likewise, public pension programs transfer wealth from the young to the old. Other forms of government expenditure which represent purchases of goods and services also have the effect of changing the income distribution. For example, engaging in a war may transfer wealth to certain sectors of society. Public education transfers wealth to families with children in these schools. Public road construction transfers wealth from people that do not use the roads to those people that do (and to those that build the roads).
Sources of public finance
Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day tax burden. The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.
A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or ascorvée labor. A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government by a payment exacted by legislative authority." A tax "is not a voluntary payment or donation, but an enforced

o Hire Purchase Finance
 Short Term Sources of Finance
Short term financing means financing for a period of less than 1 year. The need for short-term finance arises to finance the current assets of a business like an inventory of raw material and finished goods, debtors, minimum cash and bank balance etc. Short-term financing is also named as working capital financing. Short term finances are available in the form of:
 Trade Credit
 Short Term Loans like Working Capital Loans from Commercial Banks
 Fixed Deposits for a period of 1 year or less
 Advances received from customers
 Creditors
 Payables
 Factoring Services
 Bill Discounting etc.
Other financial aspects of developments
Finance and Financial Intermediaries: Self-Finance, Direct Finance, and Indirect Finance. Expenditure is self-financed by spending units with balanced budgets. Their consumption is financed from income, their investment from internal savings. If their financial assets and debt do change, the changes are equal. Self-finance continues to be important in the most sophisticated economic system, say in the form of investment out of retained corporate earnings. But over the very long term, the trend has been away from self-finance. Government, business, and consumers alike have come to lean more heavily on external finance. External finance may take either of two forms, direct finance or in- direct finance. Direct finance involves borrowing by deficit spending units from surplus spending units. The former issue debt of their own, direct debt. The latter buy and hold financial assets in the form of these direct securities. If spending on capital formation is directly financed, debt tends to accumulate paripassu with wealth. Economic development is retarded if only self-finance and direct
Debt to finance exhaustive spending is sometimes called "dead-weight" debt. We have avoided this term because it suggests, improperly in our view, that such debt is necessarily obstructive in the growth process in contrast with debt that finances expansion of productive capacity. Finances are accessible, if financial intermediaries do not evolve. The primary function of intermediaries is to issue debt of their own, indirect debt, in soliciting loanable funds from surplus spending units, and to allocate these loanable funds among deficit units whose direct debt they absorb. When intermediaries intervene in the flow of loanable funds, the accumulation of financial assets by surplus spending units continues to equal the accumulation of debt by deficit units. The rise of intermediaries-of institutional savers and investors-does not affect at all the basic equalities in a complete social accounting system between budgetary deficits and surpluses, purchases and sales of loanable funds, or accumulation of financial assets and debt. But total debt, including both the direct debt that intermediaries buy and the indirect debt of their own that they issue, rises at a faster pace relative to income and wealth than when finance is either direct or arranged internally. Institutionalization of saving and investment quickens the growth rate of debt relative to the growth rates of income and wealth.
Commercial Banks and Competitive Intermediaries. A monetary system, and especially its commercial banking component, has commonly been the first significant financial intermediary to complicate the simplicity of self-finance and direct finance. Even as late as a half- century ago in this country, the commercial banks offered the predominant escape from self-finance and direct finance. The role of the banks has been, first, to borrow loanable funds from spending units with surpluses, issuing indirect securities in exchange. These securities have been the currency and deposits that spending

Methods of development finance
Taxation
Both direct and indirect taxes have to be levied to increase the State resources. Taxes restrict domestic consumption and increase savings. It is best to impose taxes on luxury consumption and on non-entrepreneurial incomes. In backward countries, it is essential to levy indirect taxes on commodities of mass consumption. Agricultural taxes are also necessary. But care has to be taken that taxes do not weaken incentives to work, save and invest.
Government Borrowing:
The savings of the people can be mobilized by means of public loans. But the private sector competes with the government in this matter. To ensure success of the government borrowing, it is essential to establish and extend financial institutions in rural areas. It is also necessary to check unproductive investment, such as that in real estate and jewellery.
Foreign Capital:
Foreign aid is also essential. But it must be without ‘strings’, i.e., the independence of the country must not be endangered. Foreign loans nowadays come from governments and international financial institutions like the World Bank and International Development Association.
Profits of Government Undertakings:
In course of time, government undertakings yield profit and help in financing further development. But if they are to yield surpluses, they must be run efficiently.
Deficit Financing:
This is also an important source. This is ‘created’ money. Care has to be taken to keep it within limits otherwise it may lead to dangerous inflation. India has made use of all these methods in financing her Five-Year Plans. Since deficit financing is an important and Controversial means of economic

CHAPTER 2
DEVELOPMENT FINANCE
Development finance is the efforts of local communities to support, encourage and catalyze expansion through public and private investment in physical development, redevelopment and/or business and industry. It is the act of contributing to a project or deal that causes that project or deal to materialize in a manner that benefits the long-term health of the community.Development finance requires programs and solutions to challenges that the local business, industry, real estate and environment creates. As examples, we need unique financing approaches to address environmentally contaminated land and specific solutions to unlocking capital access in underserved markets and industries. Each of the problems that we seek to solve in development require unique and targeted solutions.
There are dozens of terms within the development finance industry including debt, equity, loans, bonds, credits, liabilities, remediation, guarantees, collateral, credit enhancement, venture/seed capital, angels, short-term, long-term, incentives, and gap financing.Ultimately, development finance aims to establish proactive approaches that leverage public resources to solve the needs of business, industry, developers and investors.The easiest way to understand the depth and breadth of development finance is to compartmentalize tools into basic categories.

Global development lacks a clear definition, but it is often linked with human development and international efforts to reduce poverty and inequality and improve health, education and job opportunities around the world.A variety of data can be used to describe what is also often referred to as international development, including a country’s gross domestic product or its average per-capita income, literacy and maternal survival rates, as well as life expectancy, human rights and political freedoms.While humanitarian aid and disaster relief are meant to provide short-term fixes to emergencies, international development is meant to be long-term and sustainable.For years, global development was driven by the United States and other industrialized countries in Europe and beyond. Now, we may be on the verge of a transformative change – the transition to a multipolar world economic order.That’s what two World Bank economists suggest. By 2025, they predict, six emerging economies — Brazil, China, India, Indonesia, South Korea, and Russia — will collectively account for about half of global growth. This shift will have wide-ranging consequences on the international monetary system, North-South relations, and security and stability around the globe.Already, many developing countries appear to be recovering better from recent global financial and economic turmoil. Foreign investment in Africa has surpassed foreign aid to the continent. People in the Middle East and elsewhere are demanding political reforms to boost the economy and availability of jobs.As emerging economies grow, so will their private sector companies’ influence on global business, and it may become necessary to rethink global economic governance structures through multilateral channels such as the World Trade Organization, International Monetary Fund and other Bretton Woods institutions. Financial, monetary and trade policy reforms may be needed to ensure sustainable growth.
Domestic economic development is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. It can be measured in nominal or real terms, the latter of which is adjusted for inflation. Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP), although alternative metrics are sometimes

Development:
Because the term development may mean different things to different people, it is important that we have some working definition or core perspective on its meaning. Without such a perspective and some agreed measurement criteria, we would be unable to determine which country was actually developing and which was not. This will be our task for the remainder of the chapter and for our first country case study, Brazil, at the end of the chapter.
In strictly economic terms, development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of “real” per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure of production and employment so that agriculture’s share of both declines and that of the manufacturing and service industries increases.
Stylized fact number one: There has been and continues to be a pronounced real appreciation of the currencies of the advanced transition countries of Central and Eastern Europe against the currencies of their industrial neighbors. Unless domestic real interest rates in these transition countries are kept relatively low, the currency appreciation could well attract huge capital inflows flows so large that they could overwhelm policymakers' efforts to control inflation and contain external current account deficits.

3. Specialized technical knowledge: National and international NGOs may be greater repositories of technical expertise and specialized knowledge than local governments (or businesses). In particular, international NGOs can draw on the experiences of many countries that may offer possible models for problems of poverty faced by any one country, as well as possible solutions. Of course, this forms part of the basis for credibility. These technical skills may be used for developing effective responses to locally binding poverty traps and coordination problems. Specialized knowledge is acquired in the process of doing specialized work with local citizen groups, including those of the poor knowledge. Knowledge, understood as an economic good, is also excludable but nonrival.
4. Targeted local public goods: Goods and services that are rival but excludable, including those targeted to socially excluded populations, may be best designed and provided by NGOs who know and work with these groups. Possible examples include local public health facilities, no formal education, provision of specialized village telecommunications and computing facilities, codification and integration of traditional legal and governance practices, creating local markets, community mapping and property registration, and community negotiations with governments.
5. Common-property resource management design and implementation: NGOs, including federations of local CBOs, can play an important role in common property management and targeted local public-good provision. Throughout the developing world, both governments and the private sector have a poor track record in ensuring sustainability of forests, lakes, coastal fishing areas, pasturelands, and other commons. But a large fraction of the world’s people still rely on local natural resources for most of their income and consumption. Targeted NGO and CBO programs, including training, assistance with organizational development, efforts to change no cooperative cultural characteristics, and initiating measures such as community and common-property policing, can help address common-property mismanagement and related problems. Common-property resources are rival but no excludable.

DEVEOLPMENTAL ROLES OF NON GOVERNMENTAL ORGANIZATION
1. Innovation: NGOs can play a key role in the design and implementation of programs focused on poverty reduction and other development goals. For example, NGOs that work directly with the poor may design new and more effective programs that reach the poor, facilitated by this close working relationship. Individual profit-making firms may lack incentives for poverty innovation, especially when the innovations that would be effective are so difficult to anticipate that no request for proposal could be written to draw them out. In many cases, government has an advantage in scaling up established programs.
But government has been relatively less successful at significant program innovation, compared to (or at least without a prod from) the NGO sector. Often government programs have not reached the poorest families. More broadly, government tends to offer uniform services, whereas the poor may have special needs different from mainstream populations. Some of the most important innovations in poverty programs (such as microfinance) have been conceptualized and initially developed by domestic and international NGOs. In the sphere of education, for example, NGOs have played the pioneering role in such areas as no formal education, community literacy campaigns, educational village theater, use of computer technology in urban slums, and subtitling of community center music videos for educational purposes. A key question is whether the government or private sector is then capable of scaling up NGO innovations, once they have become established as working models, as effectively as or better than the innovating NGO. In any case, if governments or private-sector firms are unable or unwilling, the experience of BRAC (see the case study at the end of this chapter) shows that NGOs may do this scaling up to a substantial degree, at least until the government is finally ready to step in. Such innovations are non rival but are potentially excludable, particularly if detailed information is not transmitted easily.
2. Program flexibility: An NGO can address development issues viewed as important for the communities in which it works. In principle, an NGO is not constrained by the limits of public policy or other agendas such as those of donor-country foreign-assistance priorities or by domestic national or local governmental programs. Indeed, national NGOs (such as BRAC, in this chapter’s case study) are in principle also unconstrained by the preferences of the international NGOs (and vice versa). Moreover, once a potential solution to a development problem has been identified, NGOs may have greater flexibility in altering their program structure accordingly than would be the case for a government program. Flexibility can be interpreted as localized innovations or minor adaptations of program innovations to suit particular needs. NGOs may be better able to make use of participation mechanisms, unconstrained by limits placed on individual rights or prerogatives for elites that prevail in the public sphere. However, there are limits to this flexibility, as NGOs may have a tendency to tailor their programs to fit the available funding, a phenomenon known as donor capture.

Legal origins
The legal origins hypothesis (La Porta et al, 1997) puts forward the idea that common law based systems, originating from English law, are better suited than civil law based systems, primarily rooted in French law, for the development of capital markets. This is because English law evolved to protect private property from the crown while French law was developed with the aim of addressing corruption of the judiciary and enhancing the powers of the state. Over time this meant that legal systems originating from English law protected small investors a lot better than systems which evolved from French law. Consequently, it is argued that capital markets developed faster in countries with common law systems than in those with civil law systems
Initial Endowments, Politics and Economic Institutions
These contributions, associated with several papers by Acemoglu and co-authors, acknowledge the importance of strong institutions for economic growth, but do not focus on financial development per se. They ascribe institutional quality differences to varying initial endowments and dynamic political economy factors.
The initial endowment hypothesis (Acemoglu et al, 2001) suggests that the disease environment encountered by European colonizing powers in past centuries proxied in empirical studies by settler mortality – was a major obstacle for the establishment of institutions that would promote long run prosperity. Thus, it is argued that European colonial powers established extractive institutions that are unsuitable for long-term growth where the environment was unfavorable and institutions that were better suited for growth where they encountered favorable environments. The main problem with this explanation is that it is static and may, at best, explain the relative position of countries a few centuries ago.
The economic institutions hypothesis
(Acemoglu et al 2004) addresses the main shortcoming of the endowment hypothesis, by proposing a dynamic political economy framework in which differences in economic institutions are the fundamental causes of differences in economic development. Economic institutions, which determine the incentives and constraints of economic agents, are social decisions that are chosen for their consequences. Political institutions and income distribution are the dynamic forces that combine to shape economic institutions and outcomes. It is argued that growth promoting economic institutions emerge when political institutions (a) allocate power to groups with interests in broad based property rights enforcement, (b) create effective constraints on power holders and (c) when there are few rents to be captured by power holders.
The incumbents and openness hypothesis as formulated by Rajan and Zingales (2003), postulates that interest groups, specifically industrial and financial incumbents, frequently stand to lose from financial development, because it usually breeds competition, which erodes their rents. They argue that incumbents‟ opposition will be weaker when an economy is open to both trade and capital flows, hence the opening of both the trade and capital accounts holds the key to successful financial development. This is not only because trade and financial openness limit the ability of incumbents to block the development of financial markets but also because the new opportunities created by openness may generate sufficient new profits for them that outweigh the negative effects of increased competition.

NGOs as watchdogs
Another key role for NGOs is to act as monitors which can, in Najam’s (1999: 152) phrase, ‘keep policy honest’. This role may include the idea of being a whistle-blower if certain policies remain unimplemented or are carried out poorly, as well as scanning the policy horizon for events and activities which could interfere with future policy development and implementation. An example of this is the US-based NGO CorpWatch, which was founded in 1996. It aims to investigate and expose corporate violations of human rights, environmental crimes, fraud, and corruption around the world and its mission is to foster global justice, independent media activism and more democratic control over corporations.
 
Partnership
A key element of current development policy is the creation of partnerships as a way of making more efficient use of scarce resources, increasing institutional sustainability and improving the quality of an NGO’s interactions. Partnership usually refers to an agreed relationship based on a set of links between two or more agencies within a project or programme, usually involving a division of roles and responsibilities, a sharing of risks and the pursuit of joint objectives. Yet partnership can also be seen as a development ‘buzzword’ par excellence, since it has come to mean different things to different development actors. At first, in the early 1990s, partnerships were proclaimed as a key policy idea but there were few clear or precise definitions. The 1997 British government White Paper on development was full of references to partnerships between countries, donors, governments, NGOs and businesses, but was vague as to the forms such partnerships might take (DFID 1997). More recently, Cornwall (2005) has shown how Action Aid Brazil’s understanding of partnership with Centro Mulheres do Cabo, a local community organization, has developed from simply being about ‘establishing a project that could be pursued together’ to becoming a much broader, two-way process in which the parties challenge each other with critical comments and ideas, exchange contacts and networks, and assist each other with expertise and methodologies. NGOs have therefore become concerned to reflect on the many meanings of partnership, and some have prepared policy documents that aim to make clearer the objectives and terms of their various partnerships (Box 5.12). The origins of a partnership are likely to be important for its performance. Some NGOs may enter into new organizational relationships in order to gain access to external resources which are conditional on partnership. Others may drift into partnerships without adequately considering the wider implications.

SOURCES OF DEVELOPMENT FINANCING IN NIGERIA
The efficient channeling of funds and allocation of financial resources are roles expected to be undertaken in the financial system to facilitate productive growth in the real sector of the economy. There have been overlapping roles in the Nigerian financial system and this has resulted to inefficient intermediation and under-development of vibrant sectors of the economy. The institutions are expected to offer specialized and micro financial services, offer relative cheap and accessible financing options, provide long-term finance for infrastructure development, industrial growth, agriculture, small and medium enterprises (SME) development and provide financial products for certain sections of the people. However, this paper evaluates the roles and structure of the development financial institutions in Nigeria and also assesses their performance over time

Social capital
NGOs have also been associated with the concept of ‘social capital’, which began to find its way into development policy debates from the mid 1990s. One of its best-known theorists is Robert Putnam (1993: 167), who uses the term to refer to the relationships of trust and civic responsibility that can accumulate among members of a community over a long period of time:
Social capital … refers to features of social organization, such as trust, norms [of reciprocity] and networks [of civic engagement], that can improve the efficiency of society by facilitating co-ordinated actions.
Social movements
A discussion of NGOs and development theory also needs to consider the field of social movements, already touched upon above in connection with ‘post-development’. Like NGOs, social movements may reflect the desire on the part of citizens to gain better access to modernity in the form of economic or social rights or welfare services through strengthened citizenship and civil society participation, but they may also take the form of movements which question and resist the global hegemonies of industrial growth, market capitalism and administrative power. The wide-ranging literature on social movements sometimes makes a distinction between longstanding or ‘classical’ social movements such as the trade unions and cooperatives, and ‘new’ social movements, which have included feminism, indigenous people and other forms of identity-based struggle. The work of French sociologist Alaine Touraine (1988) has been influential in the manner in which it shows the ways social actors build and act on identities, such as workers, women, students or environmentalist activists, to generate these new forms of social movements which emerge out of the everyday experiences of citizens living under conditions of domination. The issue of social movements raises important issues about their relationship with NGOs. Korten’s schema (see Chapter 1) was one in which the act of linking up with social movements and joining broader struggles for transformation represented the final and decisive stage in the maturation process of sustainable development NGOs. He also drew attention to the ways in which development NGOs may sometimes be born as the end-points of social movements, as in the case of James Yen’s literacy movement in 1940s China, which led to the formation of the International Institute for Rural Reconstruction and which has remained an influential NGO, with its headquarters in the Philippines. Some NGOs can be seen as organizational components of social movements which seek connections with institutionalized systems of decision-making in order to represent their interests and objectives (McCarthy and Zald 1977). On the other hand, NGOs may become advocates of issues which have yet to generate a wider social movement, such as child rights or consumer rights, by acting on behalf of a certain part of the population as the ‘advance guard’ for ideas for change.
NGO roles in contemporary development practice
Service delivery
The implementation of service delivery by NGOs is important simply because many people in developing countries face a situation in which a wide range of vital basic services are unavailable or of poor quality (Carroll 1992). There has been a rapid growth in NGO service provision, as neoliberal development policies have emphasized a decreasing role for governments as direct service providers. In many parts of the developing world, government services have been withdrawn under conditions which have been dictated by the World Bank and other donors, leaving NGOs of varying types and with capacities and competence of varying quality to pick up the peices.

Taxes
Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day tax burden. The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.
A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). Taxes could also be imposed by a sub national entity. Taxes consist of direct tax or indirect tax, and may be paid in money . A tax may be defined as a pecuniary burden laid upon individuals or property to support the government. A payment exacted by legislative authority. A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government whether under the name of toll, tribute, tillage, gable, impost, duty, custom, excise, subsidy, aid, supply, or other name.
• There are various types of taxes, broadly divided into two heads direct (which is proportional) and indirect tax (which is differential in nature):
• Stamp duty, levied on documents
• Excise tax (tax levied on production for sale, or sale, of a certain good)
• Sales tax (tax on business transactions, especially the sale of goods and services)
Value added tax (VAT) is a type of sales tax, Services taxes on specific services
• Gift tax
• Duties (taxes on importation, levied at customs)
• Corporate income tax on corporations (incorporated entities)
• Wealth tax
Debt
Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.
As the government represents the people, government debt can be seen as an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.
Most government budgets are calculated on a cash basis, meaning that revenues are recognized when collected and outlays are recognized when paid. Some consider all government liabilities, including future pension payments and payments for goods and services the government has contracted for but not yet paid, as government debt. This approach is called accrual accounting, meaning that obligations are recognized when they are acquired, or accrued, rather than when they are paid. This constitutes public debt.

CHAPTER FOUR
DISCUSS OTHER FINANCIAL ASPECTS OF DEVELOPMENT
The legal origins puts forward the idea that common law based systems, are better suited than civil law based systems, for the development of capital markets. This is because civil law evolved to protect private property from the authority while common law was developed with the aim of addressing corruption of the judiciary and enhancing the powers of the state. Consequently, it is argued that capital markets developed faster in countries with common law systems than in those with civil law systems. The view that common-law countries have better shareholder protection than civil law countries has been challenged in an important recent study. At such finances are used to developed sound legal system that will eradicate all forms of inefficiency in the market systems. This aspect of financial development has to do with the establishment of sound institutional system that will ensure that the right of everyone is protected. Unlike the civil laws that seek to satisfy the objective of those in power, this aspects of financial development advocates the funding of projects that will look into the origins of different laws that coordinate the production, consumption, and distribution system in every economy, so as to ensure the equitable distribution of resources in the society. Broad-based property rights protection is critical for investors and, consequently, for financial development. It takes central role in the political economy which, however, places little if any emphasis on the origin of the legal system. We may therefore conclude that while there is a broad consensus that a properly functioning legal system that provides effective protection for investors‟ property rights is important for financial development (and growth), the legal origins view is not widely accepted, indeed it has been largely discredited by lawyers.
These contributions, acknowledge the importance of strong institutions for economic growth, but do not focus on financial development per se. They ascribe institutional quality differences to varying initial endowments and dynamic political economy factors.
The initial endowment hypothesis suggests that the disease environment encountered by a country can be a major obstacle for the establishment of institutions that would promote long run prosperity. Thus, it is argued that European colonial powers established extractive institutions that are unsuitable for long-term growth where the environment was unfavourable and institutions that were better suited for growth where they encountered favourable environments. The economic institutions hypothesis addresses the main shortcoming of the endowment hypothesis, by proposing a dynamic political economy framework in which differences in economic institutions are the fundamental causes of differences in economic development. Economic institutions, which determine the incentives and constraints of economic agents, are social decisions that are chosen for their consequences. Political institutions and income distribution are the dynamic forces that combine to shape economic institutions and outcomes.

Debt
Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.
Seigniorage
Seigniorage is the net revenue derived from the issuing of currency. It arises from the difference between the face value of a coin or bank note and the cost of producing, distributing and eventually retiring it from circulation. Seigniorage is an important source of revenue for some national banks, although it provides a very small proportion of revenue for advanced industrial countries.
Public finance through state enterprise
Public finance in centrally planned economies has differed in fundamental ways from that in market economies. Some state-owned enterprises generated profits that helped finance government activities. The government entities that operate for profit are usually manufacturing and financial institutions, services such as nationalized healthcare do not operate for a profit to keep costs low for consumers. The Soviet Union relied heavily on turnover taxes on retail sales. Sale of natural resources, and especially petroleum products, were an important source of revenue for the Soviet Union.
In market-oriented economies with substantial state enterprise, such as in Venezuela, the state-run oil company PSDVA provides revenue for the government to fund its operations and programs that would otherwise be profit for private owners
DEVELOPMENT FINANCING IN NIGERIA
Development financing is one of the requirements for sustainable economic growth in any economy. The supply of finance to various sectors of the economy will promote the growth of the economy in a holistic manner and this will make development, welfare improvement to proceed at a faster rate. The Central Bank of Nigeria development finance initiatives involve the formulation and implementation of various policies, innovation of appropriate products and creation of enabling environment for financial institutions to deliver services in an effective, efficient and sustainable manner. The initiatives are mainly targeted at agricultural sector, rural development and micro, small and medium enterprises.
SOURCES OF DEVELOPMENT FINANCING IN NIGERIA
The efficient channeling of funds and allocation of financial resources are roles expected to be undertaken in the financial system to facilitate productive growth in the real sector of the economy. There have been overlapping roles in the Nigerian financial system and this has resulted to inefficient intermediation and under-development of vibrant sectors of the economy.

Government finance management
Collection of sufficient resources from the economy in an appropriate manner along with allocating and use of these resources efficiently and effectively constitute good financial management. Resource generation, resource allocation and expenditure management (resource utilization) are the essential components of a public financial management system.
The following subdivisions form the subject matter of public finance.
1. Public expenditure
2. Public revenue
3. Public debt
4. Financial administration
5. Federal finance
SOURCES OF GOVERNMENT FINANCING IN NIGERIA
Government expenditures are financed primarily in three ways:
• Government revenue
o Taxes
o Non-tax revenue (revenue from government-owned corporations, sovereign wealth funds, sales of assets, or seignior age)
• Government borrowing
• Money creation
Public finance research also analyzes effects of the various types of taxes and types of borrowing as well as administrative concerns, such as tax enforcement.
Taxes
Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day tax burden. The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.
• There are various types of taxes, broadly divided into two heads direct (which is proportional) and indirect tax (which is differential in nature):
• Stamp duty, levied on documents
• Excise tax (tax levied on production for sale, or sale, of a certain good)
• Sales tax (tax on business transactions, especially the sale of goods and services)
o Value added tax (VAT) is a type of sales tax
o Services taxes on specific services
• Gift tax
• Duties (taxes on importation, levied at customs)
• Corporate income tax on corporations (incorporated entities)
• Wealth tax
• Personal income tax

CHAPTER THREE
GOVERNMENT FINANCING, ITS SOURCES AND DEVELOPMENT FINANCIN IN NIGERIA AND THEIR SOURCES
A major cause of political conflict in Nigeria since independence has been the changing formula for allocating revenue by region or state. Before 1959 all revenues from mineral and agricultural products were retained by the producing region. But after 1959, the region retained only a fraction of the revenue from mineral production. This policy was a major source of dissatisfaction in the Eastern Region, which seceded in May 1967 as the would-be state of Biafra. By contrast, the revenue from agricultural exports was retained by regional marketing boards after 1959, but the agricultural exports of eastern Nigeria were smaller than those of the other major regions.
The rapid growth of petroleum revenue in the 1970s removed most of the severe constraints placed on federal and regional or state budgets in the 1960s. Total federal revenue grew from N306.4 million in 1966 to N7, 791.0 million in 1977, a twenty fivefold increase in current income in eleven years. Petroleum revenue as a percentage of the total went from 26.3 percent in 1970 to more than 70 percent by 1974-77.
During the civil war, most of the twelve new states created in 1967 faced a revenue crisis. But a 1970 decree brought the states closer to fiscal parity by decreasing the producing state's share of export, import, and excise duties, and of mining rents and royalties, and by increasing the share allocated to all states and the federal government. Also, in 1973 the commodity export marketing boards, which had been a source of political power for the states, were brought under federal control. Other changes later in the 1970s further reduced claims to revenue based on place of origin. In the 1970s, the federal government was freed to distribute more to the states, thus strengthening federal power as well as the states' fiscal positions. Statutory appropriations from the federal government to the states, only about N128 million in FY1966, increased to N1,040 million in 1975 with the oil boom, but dropped to N502.2 million in 1976, as oil revenues declined.

Profits of Government Undertakings:
In course of time, government undertakings yield profit and help in financing further development. But if they are to yield surpluses, they must be run efficiently.
Deficit Financing:
This is also an important source. This is ‘created’ money. Care has to be taken to keep it within limits otherwise it may lead to dangerous inflation. India has made use of all these methods in financing her Five-Year Plans. Since deficit financing is an important and Controversial means of economic

SOURCES OF DEVELOPMENT FINANCING
 Long-Term Sources of Finance
Long-term financing means capital requirements for a period of more than 5 years to 10, 15, and 20 years or maybe more depending on other factors. Capital expenditures in fixed assets like plant and machinery, land and building etc. of a business are funded using long-term sources of finance. Part of working capital which permanently stays with thebusiness is also financed with long-term sources of funds. Long-term financing sources can be in form of any of them:
 Share Capital or Equity Shares
 Preference Capital or Preference Shares
 Retained Earnings or Internal Accruals
 Debenture / Bonds
 Term Loans from Financial Institutes, Government, and Commercial Banks
 Venture Funding
 Asset Securitization
 International Financing by way of Euro Issue, Foreign Currency Loans, ADR, GDR etc.
 Medium Term Sources of Finance
Medium term financing means financing for a period of 3 to 5 years and is used generally for two reasons. One, when long-term capital is not available for the time being and second when deferred revenue expenditures like advertisements are made which are to be written off over a period of 3 to 5 years. Medium term financing sources can in the form of one of them:

Development finance is the efforts of local communities to support, encourage and catalyze expansion through public and private investment in physical development, redevelopment and/or business and industry. It is the act of contributing to a project or deal that causes that project or deal to materialize in a manner that benefits the long-term health of the community.Development finance requires programs and solutions to challenges that the local business, industry, real estate and environment creates. As examples, we need unique financing approaches to address environmentally contaminated land and specific solutions to unlocking capital access in underserved markets and industries. Each of the problems that we seek to solve in development require unique and targeted solutions.
There are dozens of terms within the development finance industry including debt, equity, loans, bonds, credits, liabilities, remediation, guarantees, collateral, credit enhancement, venture/seed capital, angels, short-term, long-term, incentives, and gap financing.Ultimately, development finance aims to establish proactive approaches that leverage public resources to solve the needs of business, industry, developers and investors.The easiest way to understand the depth and breadth of development finance is to compartmentalize tools into basic categories.
• Government projects are exactly what they sound like – roads, bridges, sewers, water facilities, schools, airports, docks, parking garages, broadband, utilities, etc.
• Established industry represents our industrial, office and retail sectors (depending on location). Examples such as industrial parks,manufacturing, tech/research hubs and commercial retail centers fall within this category.

The World Trade Organization is another principle player aligned with global finance. The World Trade Organization is responsible for settling disputes and negotiating international trade agreements with various international companies, institutions or government agencies.
Domestic Finance
This advises and assists in areas of domestic finance, banking, and other related economic matters. It develops policies and guidance for Treasury Department activities in the areas of financial institutions, federal debt finance, financial regulation, and capital markets.
Development means an increase in the size or pace of the economy such that more products and services are produced. Conventionally, a common assumption has been that, if an economy generates more products and services, then humans will enjoy a higher standard of living. The aim of many conventional approaches to development has been to increase the size of the economy (economic growth) in order to increase the output of products and services. Of course, without any change in the fundamental economic processes involved, the production of more products and services will inevitably require more raw materials and energy, and will generate more waste.
Global development lacks a clear definition, but it is often linked with human development and international efforts to reduce poverty and inequality and improve health, education and job opportunities around the world.A variety of data can be used to describe what is also often referred to as international development, including a country’s gross domestic product or its average per-capita income, literacy and maternal survival rates, as well as life expectancy, human rights and political

Finance is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds. It encompasses the oversight, creation and study of money, banking, credit, investments, assets and liabilities that make up financial systems.
Public finance includes tax, spending, budgeting and debt issuance policies that all affect how a government pays for the services it provides to the public. The federal government helps prevent market failure by overseeing the allocation of resources, distribution of income and stabilization of the economy. Regular funding is secured mostly through taxation. Borrowing from banks, insurance companies and other governments also help finance the government. In addition to managing money for its day-to-day operations, a government body also has larger social responsibilities. Its goals include attaining an equitable distribution of income for its citizens and enacting policies that lead to a stable economy. Global finance refers to the financial system consisting of regulators and various financial institutions that conduct their business on an international level.

Hasmath has illustrated, in the 21st century NGOs have vastly expanded and diversified their role to influence local and global governance and "[permeate] a multitude of political, economic and socio-cultural contexts." NGOs' relationship with states has accordingly changed, encompassing greater collaboration between state and non-state actors, and due to decentralization and cuts in state budgets, they are capable of delivering a wide range of services.
ROLES OF NON-GOVERNMENTAL ORGANIZATION
1. Development and Operation of Infrastructure: Community-based organizations and cooperatives can acquire, subdivide and develop land, construct housing, provide infrastructure and operate and maintain infrastructure such as wells or public toilets and solid waste collection services. They can also develop building material supply centers and other community-based economic enterprises. In many cases, they will need technical assistance or advice from governmental agencies or higher-level NGOs.
2. Supporting Innovation, Demonstration and Pilot Projects: NGO have the advantage of selecting particular places for innovative projects and specify in advance the length of time which they will be supporting the project – overcoming some of the shortcomings that governments face in this respect. NGOs can also be pilots for larger government projects by virtue of their ability to act more quickly than the government bureaucracy.
3. Facilitating Communication: NGOs use interpersonal methods of communication, and study the right entry points whereby they gain the trust of the community they seek to benefit. They would also have a good idea of the feasibility of the projects they take up. The significance of this role to the government is that NGOs can communicate to the policy-making levels of government, information bout the lives, capabilities, attitudes and cultural characteristics of people at the local level.
NGOs can facilitate communication upward from people to the government and downward from the government to the people. Communication upward involves informing government about what local people are thinking, doing and feeling while communication downward involves informing local people about what the government is planning and doing. NGOs are also in a unique position to share information horizontally, networking between other organizations doing similar work.
4. Technical Assistance and Training: Training institutions and NGOs can develop a technical assistance and training capacity and use this to assist both CBOs and governments.
5. Research, Monitoring and Evaluation: Innovative activities need to be carefully documented and shared – effective participatory monitoring would permit the sharing of results with the people themselves as well as with the project staff.
6. Advocacy for and with the Poor: In some cases, NGOs become spokespersons or ombudsmen for the poor and attempt to influence government policies and programs on their behalf. This may be done through a variety of means ranging from demonstration and pilot projects to participation in public forums and the formulation of government policy and plans, to publicizing research results and case studies of the poor. Thus NGOs play roles from advocates for the poor to implementers of government programs; from agitators and critics to partners and advisors; from sponsors of pilot projects to mediators.

4. DISCUSS OTHER FINANCIAL ASPECTS OF DEVELOPMENT
Economic development is commonly discussed in terms of wealth, the labor force, output, and income. These real or "goods" aspects of development have been the center of attention in economic literature to the comparative neglect of financial aspects. Yet development is as- sociated with debt issue at some points in the economic system and corresponding accretions of financial assets elsewhere. It is accompanied, too, by the "institutionalization of saving and investment" that diversifies channels for the flow of loanable funds and multiplies varieties of financial claims. Development also implies, as cause or effect, change in market prices of financial claims and in other terms of trading in loanable funds. Development involves finance as well as goods
Analysis of economic change and development has customarily relied on an abbreviated set of social accounts. This set of accounts reports the net worth items of income, consumption, and saving as well as the asset item of investment or wealth accumulation. The accounts omit the financial side of change and development, that is the accumulation of debt and financial assets in their various forms. They are not a complete social balance sheet. One result is that financial analysis, left to its own devices, has been difficult to coordinate with analysis "on the side of goods." Another result, we suspect, is an inadvertent undervaluetion by economists of the role that finance plays in determining the pace and pattern of growth.
A. Deficits, Surpluses, and Balanced Budgets. It is not difficult, in principle, to design a set of social accounts that does incorporate finance. Final buyers of output, or spending units, may be divided into three groups: Spending units with balanced budgets keep their spending-on consumption, investment, or government goods and services-precisely balance with income. If they save, they invest a like amount, so that their financial assets do not change relative to outstanding debt including equity claims other than earned surplus.' Spending units with surplus budgets have an excess of income over spending on goods and services. If they save, their saving exceeds their own investment, so that their financial position improves. Their financial assets increase more or decrease less than their liabilities, and they are thereby suppliers of loanable funds. Spending units with deficit budgets permit spending to exceed income.
2 They demand loanable funds, releasing financial assets or issuing debt, so that their financial assets decline relative to the sum of their liabilities and equity other than earned surplus. A complete set of social accounts would report the flows of loanable funds between spending units and the corresponding changes in financial status.
3. There are financial corollaries following from the ex-post identity of receipts and expenditures, of saving and investment, and of surpluses and deficits for the aggregate of spending units. First, loanable funds supplied equal loanable funds acquired. Second, the increase of net

b. Discourage the production of harmful goods: The governments often impose high taxes to discourage the production of harmful goods such as cigarette, alcohol, opium, etc. On the one side government collect higher revenue by imposing higher taxes on such goods and on the other sides, it helps to reduce the consumption of these goods.

c. Protection of infant industries: The infant industries are often given protection against the foreign competition through the tariff duties in the backward and underdeveloped countries. The objective of these duties is to enable the local industries to survive and grow in the home country.

d. Planned economic development: Public revenue also renders valuable helps in the planned economic development of the country. For eg; the government of India has raised the necessary funds to implement the five-year plans by levying various personal and commodities taxes.

e. Reducing economic inequalities: Public revenue also plays a vital role in reducing the economic inequalities in the capitalist country. For eg; the government can levy heavy taxes on the richer sections and spend the income on providing cheap food, cheap housing, free medical aids, etc to the poorer sections fo the society.

ROLE OF PUBLIC FINANCE IN ECONOMIC DEVELOPMENT
(i) Comprehensive Planning:
In an under-developed economy, there is a circular constellation of forces tending to act and react upon one another in such a way as to keep a poor country in a stationary state of under-development equilibrium. The vicious circle of under-developed equilibrium can be broken only by a comprehensive government planning of the process of economic development. Planning Commissions have been set up and institu¬tional framework built up.
(ii) Institution of Controls:
A high rate of investment and growth of output cannot be attained, in an under-developed country, simply as a result of the functioning of the market forces. The operation of these forces is hindered by the existence of economic rigidities and structural disequilibria. Economic development is not a spontaneous or automatic affair.
On the contrary, it is evident that there are automatic forces within the system tending to keep it moored to a low level. Thus, if an underdeveloped country does not wish to remain caught up in a vicious circle, the Government must interfere with the market forces to break that circle. That is why various controls have been instituted, e.g., price control, exchange control, control of capital issues, industrial licensing.
(iii) Social and Economic Overheads:
In the initial phase, the process of development, in an under-developed country, is held up primarily by the lack of basic social and economic overheads such as schools, technical institutions and research institutes, hospitals and railways, roads, ports, harbours and bridges, etc. To provide them requires very large investments.
Such investments will lead to the creation of external economies, which in their turn will provide incentives to the development of private enterprise in the field of industry as well as of agriculture. The Governments, therefore, go all out inbuilding up the infrastructure of the economy for initiating the process of economic growth.
Private enterprise will not undertake investments in social overheads. The reason is that the returns from them in the form of an increase in the supply of technical skills and higher standards of education and health can be realised only over a long period. Besides, these

Financial services, foreign investment and international aid are essential for trade growth and long-term development in low-income and emerging countries. Improving access to these, and boosting their efficiency, will be crucial for implementation of the sustainable development goals. In traditional development economics, the importance of trade and finance was reflected in savings and foreign exchange gaps. However, the underlying concepts and operational frameworks need to be updated to reflect changing links between trade and investment, use of innovative financial instruments and services, and the evolution of development experiences and aspirations.
The closer integration of global value chains has strengthened the links between trade, finance and sustainable development. Increased emphasis on the role of services and SMEs drives further change. The evolution of regulatory regimes, particularly possible fragmentation through mega-regionals, raises concerns in developing countries about potential difficulties to access markets and their capacity to attract financial resources.
Improvement of local financial services, capital markets, and institutional financial capacity are fundamental to development. Project finance is needed to build the hard infrastructure and skills base required to serve global markets. A large proportion of trade is financed by letters of credit, guarantees, and other instruments of trade finance, the availability and cost of which is central to the functioning of trade networks. To avoid dramatic reductions during the financial crisis, additional facilities such as the IFC’s Global Trade Liquidity Program and temporary trade finance windows were rolled out by regional development banks. A Global Trade Finance Facility, working closely with the WTO has been proposed as a potentially more permanent solution, together with an easing of regulatory conditions.
Official Development Assistance (ODA) remains a major source of revenue for Least Developed Countries (LDCs). This because it is difficult to have development without the financial backing. Development is the overall increase or improvement in the general welfare of the citizens of a country. This welfare improves when social amenities are provided, infrastructures built and many other things that could be done with the adequate finances. So there is a good relationship between finance and economic development.
A step up the development ladder, developing countries rely more on private foreign investment and remittances. Bridging the gap between aid and commerce requires support in building a favourable policy environment, creating public-private partnerships, marketable investments and growing competitive businesses able to connect to global markets. Returns, in terms of economic growth per percentage point of GDP invested, are higher in Africa than elsewhere, yet formidable barriers to foreign direct investment remain. Major investment, driven notably by Chinese demand for natural resources has occurred, yet the lack of multilateral disciplines for investment reduces the spread of robust best practices necessary to encourage investment and protect both investors and citizens.

In addition to managing money for its day-to-day operations, a government body also has larger social responsibilities. Its goals include attaining an equitable distribution of income for its citizens and enacting policies that lead to a stable economy.
THE CONCEPT OF DEVELOPMENT
Economic development is the process by which a nation improves the economic, political, and social well-being of its people. The term has been used frequently by economists, politicians, and others in the 20th and 21st centuries. The concept, however, has been in existence in the West for centuries. "Modernization, "westernization", and especially "industrialization" are other terms often used while discussing economic development. Economic development has a direct relationship with the environment and environmental issues.[further explanation needed] Economic development is very often confused with industrial development, even in some academic sources.
Whereas economic development is a policy intervention endeavor with aims of improving the economic and social well-being of people, economic growth is a phenomenon of market productivity and rise in GDP. Consequently, as economist Amartya Sen points out, "economic growth is one aspect of the process of economic development".
Development includes the process and policies by which a nation improves the economic, political, and social well-being of its people.[1]
Mansell and When also state that economic development has been understood since the World War II to involve economic growth, namely the increases in per capita income, and (if currently absent) the attainment of a standard of living equivalent to that of industrialized countries.[3][4] Economic development can also be considered as a static theory that documents the state of an economy at a certain time. According to Schumpeter and Backhaus (2003), the changes in this equilibrium state to document in economic theory can only be caused by intervening factors coming from the outside.[5]
GROWTH AND DEVELOPMENT
Economic growth deals with increase in the level of output, but economic development is related to increase in output coupled with improvement in social and political welfare of people within a country. Therefore, economic development encompasses both growth and welfare values.
Dependency theorists argue that poor countries have sometimes experienced economic growth with little or no economic development initiatives; for instance, in cases where they have functioned mainly as resource-providers to wealthy industrialized countries. There is an opposing argument, however, that growth causes development because some of the increase in income gets spent on human development such as education and health.

DISCUSS THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLLIZED FACTS
WHAT IS FINANCE?
Finance is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds. It encompasses the oversight, creation and study of money, banking, credit, investments, assets and liabilities that make up financial systems. Many of the basic concepts in finance come from micro and macroeconomic theories. One of the most fundamental theories is the time value of money, which essentially states that a dollar today is worth more than a dollar in the future.
However, finance could also be used to mean money itself. This is to say that when someone talks of needing finance it means that he needs money.
DEFINITIONS OF FINANCE
Finance is defined in numerous ways by different groups of people. Though it is difficult to give a perfect definition of Finance following selected statements will help you deduce its broad meaning.
1. In General sense, "Finance is the management of money and other valuables, which can be easily converted into cash."
2. According to Experts,"Finance is a simple task of providing the necessary funds (money) required by the business of entities like companies, firms, individuals and others on the terms that are most favourable to achieve their economic objectives."
3. According to Entrepreneurs, "Finance is concerned with cash. It is so, since, every business transaction involves cash directly or indirectly."
4. According to Academicians, "Finance is the procurement (to get, obtain) of funds and effective (properly planned) utilisation of funds. It also deals with profits that adequately compensate for the cost and risks borne by the business."
Since individuals, businesses and government entities all need funding to operate, the field is often separated into three main sub-categories: personal finance, corporate finance and public (government) finance.
• Personal finance
• Corporate finance
• Public finance

NGOs Impact on Development
According to Todaro and Smith (2003, page 658-659): “While there is much debate about the pros and cons of multinational corporate investment and public foreign aid in developing countries, few people doubt the value of one of 3 development assistance, private nongovernmental organizations (NGOs). NGOs are voluntary organizations that work with and on behalf of mostly local grassroots organizations in developing countries. They also represent specific local and international interest groups with concerns as diverse as providing emergency relief, protecting child health, promoting women’s rights, alleviating poverty, protecting the environment, increasing food production, and providing rural credit to small farmers and local businesses. NGOs build roads, houses, hospitals, and schools. They work in family planning clinics and refugee camps. They teach in schools and universities and conduct research on increasing farm yields.” NGOs include religious groups, private foundations and charities, research organizations, and a federation of doctors, nurses, engineers, agricultural scientists, and economists.
Many work directly on grassroots rural development projects; others focus on relief efforts for starving or displaced peoples. Some familiar NGOs include Save the Children, CARE, Oxfam, Planned Parenthood, World Vision, World Wildlife Fund, Habitat for Humanity, Ford Foundation, Christian Aid, Project HOPE, and Amnesty International. Between 1970 and 1990, funding devoted to developed-country NGO projects and programs in LDCs grew from just under $1 billion to over $5 billion. Almost half of that total came from the United States, even though the highest per capita contributions to NGOs came from Sweden, Switzerland, Norway, and Germany. Many give full local control to their LDC affiliates or other local groups that they support.
The great value of NGOs is twofold. First, being less constrained by political imperatives and motivated largely by humanitarian ideals, most NGOs can work more effectively at local levels than massive bilateral and multilateral aid programs. Second, by working directly with local people’s organizations, many NGOs are able to avoid the suspicion and cynicism on the part of the mostly poor people whom they serve. NGOs in developing countries are affecting the lives of 250 million people; the fact that their voices are increasingly being listened to in the halls of developed country governments and at international conferences on development, such as the 1992 Rio Environmental Summit, the 1994 Cairo Population Conference, the 1995 Copenhagen Social Summit and the Beijing Women’s conferences, and Copenhagen +5 follow-up meetings in Geneva in 2000, makes it clear that the nature and focus of foreign aid are changing rapidly. A striking illustration of this changing environment was the pledge by the U.S. government at the 1995 Copenhagen Social Summit that within five years it would channel nearly half of its foreign aid to private NGOs (both in developed and developing countries) rather than directly to the LDC governments.

CHAPTER FOUR
OTHER FINANCIAL ASPECTS OF DEVELOPMENT

Despite from the conventional generation of finance or revenue by the government of a country from taxes, borrowing, seigniorage, etc. finance can also be obtained or acquired from other sources such as state owned enterprises, domestic savings, foreign capital, profits of government undertakings, deficit financing
Public finance in centrally planned economies has differed in fundamental ways from that in market economies. Some state-owned enterprises generated profits that helped finance government activities. The government entities that operate for profit are usually manufacturing and financial institutions, services such as nationalized healthcare do not operate for a profit to keep costs low for consumers. The Soviet Union relied heavily on turnover taxes on retail sales. Sale of natural resources, and especially petroleum products, were an important source of revenue for the Soviet Union. In market-oriented economies with substantial state enterprise, such as in Venezuela, the state-run oil company PSDVA provides revenue for the government to fund its operations and programs that would otherwise be profit for private owners. In various mixed economies, the revenue generated by state-run or state-owned enterprises are used for various state endeavors; typically, the revenue generated by state and government agencies goes into a sovereign wealth fund. An example of this is the Alaska Permanent Fund and Singapore's Temasek Holdings. Various market socialist systems or proposals utilize revenue generated by state-run enterprises to fund social dividends, eliminating the need for taxation altogether.
The savings of the people can be mobilized by means of public loans. But the private sector competes with the government in this matter. To ensure success of the government borrowing, it is essential to establish and extend financial institutions in rural areas. It is also necessary to check unproductive investment, such as that in real estate and jewellery.
Foreign aid is also essential. But it must be without ‘strings’, i.e., the independence of the country must not be endangered. Foreign loans nowadays come from governments and international financial institutions like the World Bank and International Development Association.
In course of time, government undertakings yield profit and help in financing further development. But if they are to yield surpluses, they must be run efficiently.
Deficit financing is also an important source. This is ‘created’ money. Care has to be taken to keep it within limits otherwise it may lead to dangerous inflation. India has made use of all these methods in financing her Five-Year Plans. Since deficit financing is an important and Controversial means of economic development.

Conclusively, government expenditures are financed primarily in three ways:
• Taxes
• Non-tax revenue (revenue from government-owned corporations, sovereign wealth funds, sales of assets, or seigniorage)
• Government borrowing
• Money creation
Taxes
Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day tax burden. The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.
Debt
Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.
As the government represents the people, government debt can be seen as an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.
Most government budgets are calculated on a cash basis, meaning that revenues are recognized when collected and outlays are recognized when paid. Some consider all government liabilities, including future pension payments and payments for goods and services the government has contracted for but not yet paid, as government debt. This approach is called accrual accounting, meaning that obligations are recognized when they are acquired, or accrued, rather than when they are paid. This constitutes public debt.
Seigniorage
Seigniorage is the net revenue derived from the issuing of currency. It arises from the difference between the face value of a coin or bank note and the cost of producing, distributing and eventually retiring it from circulation. Seigniorage is an important source of revenue for some national banks, although it provides a very small proportion of revenue for advanced industrial countries.

CHAPTER TWO

LINKAGES AND INTER-LINKAGES BETWEEN FINANCE AND DEVELOPMENT

There exists a positive linkage or relationship between finance and development because the finance or revenue generated in a country are used to execute or carry out the activities and operations of the government e.g. building infrastructures, eradicating poverty, providing employment, promoting investments which all have great role in the development of a country.
The country’s huge infrastructure deficit underscores the need for capital mobilisation required to finance activities and ensure sustainable growth and development in a country. Globally, the relationship between the financial system and development remains very critical for any economy to realise its potential.
Financial system development depends largely on the flow of funds from the banking system. Economic development on the other hand, experts stressed, is about enhancing the productive capacity of an economy by using available resources to reduce risks, remove impediments which otherwise could lower costs and hinder investment. The banking system plays the important role of promoting economic growth and development through the process of financial intermediation.
Many economists have acknowledged that the financial system, with banks as its major component, provide linkages for the different sectors of the economy and encourage high level of specialisation, expertise, economies of scale and a conducive environment for the implementation of various economic policies of government intended to achieve non-inflationary growth, exchange rate stability, balance of payments equilibrium and high levels of employment.
Well-functioning financial systems can mobilise household savings, allocate resources efficiently, diversify risk, and enhance the flow of liquidity, reduce information asymmetry and transaction cost and provides an alternative to raising funds through individual savings and retained earnings.

Joseph Schumpeter, in his “The Theory of Economic Development,”acknowledged the role of finance in economic development, stressing that financial intermediation is critical for economic development. He further stated that financial intermediation through the banking system plays an essential role in economic development by affecting the allocation of savings, thereby improving productivity, technical change and the rate of economic growth.
Also, McKinsey & Co, a global management consulting firm, had in a report, noted that Nigeria has the potential to be one of the world’s top 20 economies by 2030 with a consumer base that will exceed the current population of France and Germany.
It also noted that sales of consumer goods in the country may more than triple to almost $1 trillion by 2030, noting that Nigeria is developing a large consuming class. The report also predicted that by 2030, about 160 million Nigerians (out of a projected population of 273 million), could live in households with sufficient incomes for discretionary spending. This, therefore underlines the need to promote consumer lending in the country.

CHAPTER ONE
THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACTS
Economic development is a term that economists, politicians, and others have used frequently since the 20th Century. The concept, however, has been in existence in the West for centuries. The term refers to economic growth accompanied by changes in output distribution and economic structure. It is concerned with quality improvements, the introduction of new goods and services, risk mitigation and the dynamics of innovation and entrepreneurship.
Economic development has direct relationship with the environment. Whereas economic development is a policy intervention endeavour with aims of economic and social well-being of people, economic growth is a phenomenon of market productivity and rise in GDP. Consequently, as an economist Amartya Sen points out, “economic growth is one aspect of the process of economic development.
Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy, and poverty rates. Due to the fact that GDP alone does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic well-being have been proposed. Essentially, a country’s economic development is related to its human development, which encompasses, among other things, health and education. These factors are, however, closely related to economic growth so that development and growth often go together.
Finance on the other hand, refers to the income or revenue of the government of a country. Finance can be generated from taxes, exportation of goods, borrowing etc. The size of governments, their institutional composition and complexity, their ability to carry out large and sophisticated operations, and their impact on the other sectors of the economy warrant a well-articulated system to measure government economic operations and therefore have high dependence on the level of finance or revenue available. Collection of sufficient resources from the economy in an appropriate manner along with allocating and use of these resources efficiently and effectively constitute good financial management. Resource generation, resource allocation and expenditure management (resource utilization) are the essential components of a public financial management system. How a government chooses to finance its activities can have important effects on the distribution of income and wealth (income redistribution) and on the efficiency of markets (effect of taxes on market prices and efficiency). The issue of how taxes affect income distribution is closely related to tax incidence, which examines the distribution of tax burdens after-market adjustments are taken into account. Public finance research also analyzes effects of the various types of taxes and types of borrowing as well as administrative concerns, such as tax enforcement.
Since economic development and growth cannot be discussed in isolation of a referenced community, society or nation, efforts will be made in this study to relate essentially to the economic development parameters in the Nigerian nation.

As stated earlier, most development-oriented NGOs in the Third World use new and innovative development strategies such as the "minimalist costeffective approach (favored by microfinance institutions/poverty lending programs), "assisted self-reliance" or "participatory development." Overall, NGOs appear well suited to adapt the use of such innovative strategies because of their small-scale of operations, flexibility and great capacity to mobilize resources and to organize people to solve their own problems. The new development strategies perceive people as active participants of their own development. These "bottom-up" development strategies stand in sharp contrast to the "topdown" capitalist and state socialist models of development. Both the capitalist model based on "trickle-down" and the state socialist model of "egalitarian development" based on central/state planning of economic activity have failed to meet basic needs of the poor, women and children and have not helped these marginalized groups to solve their own problems. Both models offer no real choice to the poor about immediate local problems faced or needs. Both forms of institutionalized "top-down" directed development discourage popular citizen participation and de-emphasize people-centered development activity. And finally, both models stress large-scale, capital intensive projects that are susceptible to elite control, corruption, and inefficiency.
CONCLUSION
As we start the 21st century, NGOs hold a great promise to provide self-help solutions to problems of poverty and powerlessness in many Third World societies. They are increasingly making up for the shortcomings of the state and market in reducing poverty in Third World countries. Furthermore, their future role in development is expected to increase precisely because of favorable international donor support. In fact, since the launching of the Structural Adjustment Participatory Review Initiative (SAPRI) in 1997, NGOs are increasingly influencing economic and social development policy in Third World countries. SAPRI provides a framework for joint evaluation of economic reform by the World Bank, Third World governments, and one thousand civil society organizations including NGOs. But despite their growing role and expected contribution to Third World development, NGOs should neither be considered a panacea nor the "magic bullet" for solving the problems of development.

IMPACT OF NGO (Nongovernmental Organizations (NGOS) and Third World Development An Alternative Approach to Development)
Evidence accumulated over the past three decades shows "the inability of the African State to deliver on its development promise."26 In fact, the African State is now perceived as "the inhibitor of social, economic, and political development."27 The demise of the African State has inevitably given rise to the ascendancy of NGOs to fill up the "development vacuum" that has been created. The expansion of the NGO sector in Africa is most clearly reflected at the country level. For example, in Kenya there are about 500 NGOs and in Uganda there are more than 1,000 registered foreign and indigenous NGOs. Similarly, other African countries have a large number of active NGOs. These countries include: "Zambia with 128, Tanzania with 130, Zimbabwe with 300, and Namibia with over 55."28 The growing role of NGOs in all sectors of development is an indication of the decreasing capacity of the African state to undertake meaningful development. Besides increases in NGO numbers, the amount of development resources they receive or handle for development purposes has grown over the years. It is estimated that "official aid to Kenyan NGOs amounts to about US$35 million a year, which is about 18 percent of all official aid received by Kenya annually [and] . . . in Uganda, NGOs disburse an estimated 25 percent of all official aid to Uganda."29
The weakening financial situation of Uganda and Kenya, like that of other African countries, is due to a combination of huge external debts, corruption and the effects of structural adjustment programs imposed by the International Monetary Fund (IMF). In particular, the structural adjustment programs have "strained the ability of the African states to provide services and has attracted more NGOs to cushion the adverse short-term effects of adjustment programs, such as by providing affordable healthcare services."30 Given the prevailing political and economic conditions in Uganda and Kenya, as well as elsewhere in Africa, the role and contribution of NGOs to the development process is expected to increase.

Towns and municipalities may be permitted to issue bonds, which are a form of debt, for financing economic development. Government agencies have historically created programs that provide some tax incentive for local areas to sell bonds to investors to raise money for projects. Municipal bond issuance is not uncommon, but to qualify for a specific government program that provides incentives issuers may need to agree to use the financing towards improving business conditions in poverty-stricken areas or in places where unemployment has been a significant problem.
Other aspects to consider are;
Taxation:
Both direct and indirect taxes have to be levied to increase the State resources. Taxes restrict domestic consumption and increase savings. It is best to impose taxes on luxury consumption and on non-entrepreneurial incomes. In backward countries, it is essential to levy indirect taxes on commodities of mass consumption. Agricultural taxes are also necessary. But care has to be taken that taxes do not weaken incentives to work, save and invest.
Government Borrowing:
The savings of the people can be mobilized by means of public loans. But the private sector competes with the government in this matter. To ensure success of the government borrowing, it is essential to establish and extend financial institutions in rural areas. It is also necessary to check unproductive investment, such as that in real estate and jewellery.
Foreign Capital:
Foreign aid is also essential. But it must be without ‘strings’, i.e., the independence of the country must not be endangered. Foreign loans nowadays come from governments and international financial institutions like the World Bank and International Development Association.
Profits of Government Undertakings:
In course of time, government undertakings yield profit and help in financing further development. But if they are to yield surpluses, they must be run efficiently.
Deficit Financing:
This is also an important source. This is ‘created’ money. Care has to be taken to keep it within limits otherwise it may lead to dangerous inflation. India has made use of all these methods in financing her Five-Year Plans. Since deficit financing is an important and Controversial means of economic development.

Nigeria’s development financing is by taxes being imposed on the citizens. A major source is through the revenues gotten from the exportation of crude oil which accounts for about 90% of government revenue.
Grants from foreign organisations and countries have also constituted the sources that finances Nigeria’s development. On January 26, the U.S. Agency for International Development (USAID) announced $89 million in additional development assistance to Nigeria to continue its support for development goals outlined in a Development Objectives Assistance Agreement between the U.S. and Nigerian governments signed in 2015.
Nearly half of the new funding ($44 million) will support HIV/AIDS control through the President’s Emergency Plan for AIDS Relief (PEPFAR). The remainder will help northeast Nigeria increase agricultural productivity and economic growth ($15 million); strengthen education ($11 million); support good governance ($10.5 million); and improve water and sanitation infrastructure ($9 million). The new funding brings the total U.S. government assistance provided under the five-year assistance agreement to $808.5 million.
“This new assistance underscores how important the relationship between Nigeria and the United States continues to be,” USAID Acting Mission Director Julie Koenen said. “Our strong partnership with Nigeria and its institutions will help Nigeria’s efforts to improve its health, education, agriculture and governance systems where they are needed most throughout the country.”
USAID collaborated with the Nigerian Ministry of Budget and National Planning, the Nigerian Ministries of Health, Agriculture, Power, and Education, and state-level government counterparts – among others to structure the bilateral assistance agreement, which runs through 2020.
In addition to the development assistance funding, the United States provides humanitarian assistance to people affected by the ongoing conflict and severe food insecurity in Nigeria and throughout the Lake Chad Basin. The U.S government led by USAID has provided more than $526.7 million in humanitarian assistance since 2017, and continues to be the single largest bilateral humanitarian donor to the region.

A quite distinct type of fee is that charged for citizen's use of assets held by the government acting as a custodian of national assets. The latter includes natural resources such as from forests and mines and national treasures such as wildlife parks and historical monuments. In the case of fees for assets held custodially, it is hard for anyone to argue that sale of these treasures (for example the Taj Mahal or Corbett National Park) is socially desirable. In the case, say, of a nation's mineral wealth it is possible to sell assets (e.g. through mining concessions and leases) and, indeed, many countries do so. For assets which the government does not sell, the marginal cost of maintaining these assets should, where relevant, first be provided for. However, in setting charges, a second consideration is the longevity and exhaustibility of these assets. In principle, future generations also have rights to these assets so prices should be set high enough to ensure that the current generation does not overexploit it. While principles for the pricing of exhaustible resources have been extensively studied, they are seldom applied in practice and both royalties and entry fees at heritage sites are generally reckoned to be below what is socially desirable.
Earnings of the government, other than the sort of charges and fees discussed above typically consist of net revenues from the sale of commodities by public sector undertakings.
Consider, first, manufactured outputs of public sector undertakings. In principle, there should be no net gain to the government from public undertakings, and even a loss in case of increasing returns to scale, if the government prices these commodities at their marginal cost, as is socially desirable. To the extent that price exceeds marginal cost, prices charged are akin to a poll tax on citizens, who are, after all, the ultimate owners of these undertakings. The incidence of this poll tax depends on the importance of the commodities in question in the consumption basket of different groups. While there is largely a consensus on pricing of products of public sector undertakings, there is also a general view that public sector undertakings in most developing countries produce many goods which the private sector could produce more efficiently. Consequently, in many countries an additional temporary source of funds for the government is capital receipts from the privatisation of public enterprises.

The results on causality test revealed different results for the different countries. It was revealed that financial development leads to economic growth in Singapore through the channel of investment and export, in the short run analysis.
In support of the study by Tan et al. (2007) is the analysis of the various channels through which financial deepening affect economic growth and the analysis on the unit root test as well as the causality test which are necessary for expanded analysis and policies discussions. It also helps avoid spurious regression and biasness of results.
Rahman (2007) examined the causality link between economic growth and financial development for Bangladesh for the period 1976-2005. The results indicated that the series were cointegrated. It was also revealed based on the response matrix
that there is significant effect of financial development on economy growth in the long run through investment. It was again established that economic growth increase at 0.6% with a 1% increase in financial development.
In the short run also, financial development affects economic growth positively as evident by the impulse response functions.

The long run relationship between the variables was all smaller such 0.29; 0.06; and 0.12 as compared to the findings from other studies which have large values (Spears 1992). This means the relationship was not strong but weak.
There was insignificant long run relationship for other coThe long run relationship between the variables was all smaller such 0.29; 0.06; and 0.12 as compared to the findings from other studies which have large values (Spears 1992). This means the relationship was not strong but weak.
There was insignificant long run relationship for other countries such as Nigeria, Ghana and Benin which contradicts some earlier studies. This also means the development of the financial sector does not affect the growth of the economy.
There was significant negative effect of FD on growth in Cape Verde, and Sierra Leone. If the financial sector develops the economy does not grow. For the economy to grow the financial sector does not matter. The growth of the financial sector is works against the economic growth of the countries.
On the issue of causality, it was revealed at the 0.05 significant levels that FD causes EG in Guinea, and Cote d’ivoire. This means economic growth is as a result of financial sector development. Financial sector development is not only a
determinant of economic growth but also it causes economic growth which also contradict some earlier studies.
The study by Esso (2009) is of interest for the fact that stationarity properties were investigated. Larger sample size was also used in this study. Esso (2009) argued that it is important for the two countries with positive relationship between FD and
Growth to seriously develop the financial sector if they intend achieving sustainable growth. The study is based on bivariate analysis which may suffer from omission of relevant variables.
A study by Ghimire and Giorgioni (2009) for group of countries (1970-2006) found that the series (private credit, bank credit, capitalization, and value traded, capital formation, and education) were integrated. It was also revealed that private credits have significant negative effect on economic growth in addition to turnover. This means credit facility to the private
sector do not improve economic growth but rather worsen it.
The study again established no strong positive relationship between private credit and economic growth in the long run, for various countries in the study. The conclusion from these findings is that the stock market does not promote economic
growth. The study did not take into account the causality direction of the variable to discuss cause and effect
untries such as Nigeria, Ghana and Benin which contradicts some earlier studies. This also means the development of the financial sector does not affect the growth of the economy.
There was significant negative effect of FD on growth in Cape Verde, and Sierra Leone. If the financial sector develops the economy does not grow. For the economy to grow the financial sector does not matter. The growth of the financial sector is works against the economic growth of the countries.
On the issue of causality, it was revealed at the 0.05 significant levels that FD causes EG in Guinea, and Cote d’ivoire. This means economic growth is as a result of financial sector development. Financial sector development is not only a
determinant of economic growth but also it causes economic growth which also contradict some earlier studies.
The study by Esso (2009) is of interest for the fact that stationarity properties were investigated. Larger sample size was also used in this study. Esso (2009) argued that it is important for the two countries with positive relationship between FD and
Growth to seriously develop the financial sector if they intend achieving sustainable growth. The study is based on bivariate analysis which may suffer from omission of relevant variables.

Bangake and Eggoh (2010) used panel data to examine for 71 developed and developing countries over the period
1960-2004 the relationship between financial development and economic growth and the direction of causality.
The result on the cointegration test revealed that the variables are cointegrated at the 1 percent significance level which indicates statistical significant long-run relationship among the variables in the study for all the countries. The results indicated that the link is stronger in the high income economies than in lower income economies.
The panel VECM results which was based on the GMME revealed that there is statistical significant short and long run causality running from finance to economic growth in all the countries in the study, with the long run causality been strong than the short run causality.
There was also significant long run causality running from economic growth to financial development but not significant short run casualty from growth to finance. These findings support significant bidirectional causality for the link between finance and economic growth the demand-side and supply side hypothesis are supported in this study.
The study by Bangake and Eggoh (2010) is interested for these reasons. They included control variables such as government expenditure as ratio to GDP (GOV) and the openness to trade as the ratio of exports and import to GDP (OPEN). Unit root test was also performed to avoid spurious results. But the three financial development proxies used did not capture the
stock market effect on economic growth.
Kargbo and Adamu (2010) identified short run and long run, relationship among financial development index, ration of investment to GDP, real deposit rate, and economic growth. This indicates that through investment financial development
positively affect economic growth. This study did not take into consideration causality issues.
The ARDL model was used which is current in nature and appropriate for small sample. Kargbo and Adamu (2010) study follows the standard practice by examining the unit root properties of the seines to assure valid results.
In the Baltic countries using quarterly data for the period 1995-2008 support was found for the view that financial development cause economic growth in the long run by Soultanaeva (2010). Financial development was proxied by banking
credit available to private sector. The study did not consider the stock market variables which are considered in some study to ensure expanded discussion of the effect of financial development on economic growth.

Government can directly invest in physical capital or infrastructure or it can encourage private sector investment. Investments in human capital may have persistent impacts on economic growth if education enables ongoing innovation and advances in technological progress. Individuals and firms may under-invest in human capital from an economy-wide perspective as they will not factor in the positive flow-on effects to other workers and businesses from investment in education and training. This can be compounded by problems in accessing capital to finance investment in education, providing a rationale for government funding of education.
Finance development can also be linked to economic development. The role of financial development in economic growth has received a lot of attention in both theoretical and empirical
literature since one of the main goals of economic managers and planners is economic growth. One argument is that efficient financial sector results in savings mobilisation which leads to investment with the resultant effect of economic growth, other things equal.
Other researchers criticise this view and explain that growth in income (economic growth) results in efficient financial sector development. There are others who think that financial development leads to economic growth while as economic growth also leads to financial development. The last group is those who believe there is neutral effect between finance and
growth (Neutral effect) effect. This means there is no statistical significant link between growth and income.
Some researchers argued that there is complex link between finance and growth for it to be identified in an empirical study and that if the link is identified with causality from finance to growth, then more effort must be put in place to develop the economy through finance.

There is also an implicit belief that the Nigerian economic environment has been unable to attract foreign direct investment to its fullest potentials, given the unstable operating environment, which is characterized by inefficient capital markets, high rate of inflation, unstable polity, stringent policies and fragile financial system, among others.
Another major problem is the element of fiscal dominance. A size of fiscal deficit has an implication for domestic savings and investment and ultimately economic growth. In Nigeria, the main factor underlying these outcomes is the volatility of government expenditure arising from the boom and burst cycle of government revenue which is derived mainly from single export commodity (oil), whose price is also volatile. To worsen the problem, these expenditures are not channeled to productive sectors of the economy, Yesuf (1996) .
Prior to Nigeria political independence in 1960, agriculture was the mainstay of the economy. The present heavy reliance on primary commodity has induced adverse terms of trade shocks leading to huge current account deficits and exchange rate volatility and consequently a weak external sector for Nigeria. The trend in the current account amplifies the degree of import-dependence of the Nigerian economy. The deployment of the lean resources to finance huge debt service payments crowds out public investment in the productive sectors of the economy and with these developments, achievement of sustainable economic growth have become a difficult task.
Against this background of sluggish and volatile rate of economic growth which is accompanied with declining productivity signals, and Nigeria being a developing economy characterized by significant debt burden, structural imbalance and uncertainties, an insight into the determinants of Nigeria’s economic growth as well as their causal relationship with growth, has become pertinent.
However, most of the scholars of economics are of the view that the problem of Nigeria’s economic growth has not been well understood thus, improperly managed. Most of the reviewed studies have some methodological and conceptual problems that undermine their accuracy and thus their efficacy for effective policy purposes.

CHAPTER ONE
THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACTS
Finance is a term describing the study and system of money, investments, and other financial instruments.
Public finance includes tax systems, government expenditures, budget procedures, stabilization policy and instruments, debt issues, and other government concerns. Governments need to perform various functions in the field of political, social and economic activities to maximize social and economic welfare. In order to perform these duties and functions government require large amount of resources. The federal government helps prevent market failure by overseeing the allocation of resources, distribution of income, and stabilization of the economy. Regular funding for these programs is secured mostly through taxation. Borrowing from banks, insurance companies, and other governments and earning dividends from its companies also help finance the federal government. State and local governments also receive grants and aid from the federal government. Other sources of public finance include user charges from ports, airport services, and other facilities; fines resulting from breaking laws; revenues from licenses and fees, such as for driving; and sales of government securities and bond issues.
Economic development is the process by which a nation improves the economic, political, and social well-being of its people. The term has been used frequently by economists, politicians, and others in the 20th and 21st centuries. The concept, however, has been in existence in the West for centuries.

GOVERNMENT FINANCING AND ITS SOURCES
the branch of economics concerned with the income and expenditure of public authorities and its effect upon the economy in general. When the CLASSICAL ECONOMISTS wrote upon the subject of public finance, they concentrated upon the income side, TAXATION. Since the Keynesian era of the 1930s, much more emphasis has been given to the expenditure side and the effect that FISCAL POLICY has on the economy.
The PUBLIC SECTOR is so large a part of most economies that it influences virtually every aspect of economic life, either through its own expenditure on goods and service provided by the private sector, its wage payments to public-sector employees, or its social security payments (pensions, sickness and unemployment benefits). Similarly, the financing of these expenditures by means of various taxes (income tax, value-added tax, corporation tax, etc.) affects the size and pattern of spending by individuals and businesses.
Governments plan their revenue and expenditure each fiscal year by preparing a budget (see BUDGET (GOVERNMENT) They may plan to match their expenditure with their revenue, aiming for a BALANCED BUDGET; or they may plan to spend less than they raise in taxation, running a BUDGET SURPLUS and using this surplus to repay former public debts (see NATIONAL DEBT); or they may plan to spend more than they raise in taxation, running a BUDGET DEFICIT that has to be financed by borrowing (see PUBLIC-SECTOR BORROWING REQUIREMENT).

CHAPTER FIVE
THE CONCEPT OF NON-GOVERNMENTAL ORGANIZATION AND THEIR IMPACT ON DEVELOPMENT
Non-governmental organizations, commonly referred to as NGOs, are usually non-profit and sometimes international organizations[5] independent of governments and international governmental organizations (though often funded by governments) that are active in humanitarian, educational, health care, public policy, social, human rights, environmental, and other areas to effect changes according to their objectives. They are thus a subgroup of all organizations founded by citizens, which include clubs and other associations that provide services, benefits, and premises only to members. Sometimes the term is used as a synonym of "civil society organization" to refer to any association founded by citizens,[11] but this is not how the term is normally used in the media or everyday language, as recorded by major dictionaries. The explanation of the term by NGO.org (the non-governmental organizations associated with the United Nations) is ambivalent. It first says an NGO is any non-profit, voluntary citizens' group which is organized on a local, national or international level, but then goes on to restrict the meaning in the sense used by most English speakers and the media: Task-oriented and driven by people with a common interest, NGOs perform a variety of service and humanitarian functions, bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through provision of information.[12]
NGOs are usually funded by donations, but some avoid formal funding altogether and are run primarily by volunteers. NGOs are highly diverse groups of organizations engaged in a wide range of activities, and take different forms in different parts of the world. Some may have charitable status, while others may be registered for tax exemption based on recognition of social purposes. Others may be fronts for political, religious, or other interests. Since the end of World War II, NGOs have had an increasing role in international development, particularly in the fields of humanitarian assistance and poverty alleviation.
The number of NGOs worldwide is estimated to be 10 million. The term 'NGO' is not always used consistently. In some countries the term NGO is applied to an organization that in another country would be called an NPO (non-profit organization), and vice versa.

Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.[8]
A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as corvée labor. A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government [ . . .] a payment exacted by legislative authority."[9] A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government [ . . .] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."
• There are various types of taxes, broadly divided into two heads – direct (which is proportional) and indirect tax (which is differential in nature):
• Stamp duty, levied on documents
• Excise tax (tax levied on production for sale, or sale, of a certain good)
• Sales tax (tax on business transactions, especially the sale of goods and services)
• Value added tax (VAT) is a type of sales tax
o Services taxes on specific services
• Road tax; Vehicle excise duty (UK), Registration Fee (USA), Regco (Australia), Vehicle Licensing Fee (Brazil) etc.
• Gift tax
• Duties (taxes on importation, levied at customs)
• Corporate income tax on corporations (incorporated entities)
• Wealth tax
• Personal income tax (may be levied on individuals, families such as the Hindu joint family in India, unincorporated associations, etc.)
Debt
Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.
As the government represents the people, government debt can be seen as an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.
Most government budgets are calculated on a cash basis, meaning that revenues are recognized when collected and outlays are recognized when paid.
Some consider all government liabilities, including future pension payments and payments for goods and services the government has contracted for but not yet paid, as government debt. This approach is called accrual accounting, meaning that obligations are recognized when they are acquired, or accrued, rather than when they are paid. This constitutes public debt.

Seigniorage
Seigniorage is the net revenue derived from the issuing of currency. It arises from the difference between the face value of a coin or bank note and the cost of producing, distributing and eventually retiring it from circulation

CHAPTER TWO
DISCUSS THE CONCEPT OF FINANCE AND DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZED FACTS
THE CONCEPT OF FINANCE
FINANCE is a field that is concerned with the allocation (investment) of assets and liabilities (known as elements of the balance statement) over space and time, often under conditions of risk or uncertainty. Finance can also be defined as the science of money management. Market participants aim to price assets based on their risk level, fundamental value, and their expected rate of return. Finance can be broken into three sub-categories: public finance, corporate finance and personal finance.
PUBLIC FINANCE
Public finance describes finance as related to sovereign states and sub-national entities (states/provinces, counties, municipalities, etc.) and related public entities (e.g. school districts) or agencies. It usually encompasses a long-term strategic perspective regarding investment decisions that affect public entities. These long-term strategic periods usually encompass five or more years. Public finance is primarily concerned with:
• Identification of required expenditure of a public sector entity
• Source(s) of that entity's revenue
• The budgeting process
• Debt issuance (municipal bonds) for public works projects
FINANCIAL THEORY
Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to goods and services. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance. It centres on managing risk in the context of the financial markets, and the resultant economic and financial models. It essentially explores how rational investors
rational investors would apply risk and return to the problem of an investment policy. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), and to the Black–Scholes theory for option valuation; it further studies phenomena and models where these assumptions do not hold, or are extended. "Financial economics", at least formally, also considers investment under "certainty" (Fisher separation theorem, "theory of investment value", Modigliani–Miller theorem) and hence also contributes to corporate finance theory. Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize the relationships suggested.
Although they are closely related, the disciplines of economics and finance are distinct. The “economy” is a social institution that organizes a society’s production, distribution, and consumption of goods and services, all of which must be financed.

Seigniorage is an important source of revenue for some national banks, although it provides a very small proportion of revenue for advanced industrial countries.
A major cause of political conflict in Nigeria since independence has been the changing formula for allocating revenue by region or state. Before 1959 all revenues from mineral and agricultural products were retained by the producing region. But after 1959, the region retained only a fraction of the revenue from mineral production. This policy was a major source of dissatisfaction in the Eastern Region, which seceded in May 1967 as the would-be state of Biafra. By contrast, the revenue from agricultural exports was retained by regional marketing boards after 1959, but the agricultural exports of eastern Nigeria were smaller than those of the other major regions.

CHAPTTER FOUR
DO A CRITICAL ANALYSIS OF THE LINKAGES AND INTER-LINKAGES BETWEEN FINANCE AND DEVELOPMENT
How does the structure and growth of the financial sector in a country affect the growth and development of its economy? How is the rural economy affected by improved access to financial services? What are the results of the new emphasis on improving the access of the poor to microfinance services? An explosion of empirical research in recent years provides new information that I use in this survey paper to address these issues. Many of the publications cited concerning the cross-country analysis of financial systems were based on the analysis of new multi-country data sets recently created covering the period 1960 to 1997.1 A recent AID conference on rural finance also provided important information summarizing the state of the art.
Questions about the relationship between finance and economic development
How have economists’ views evolved over time regarding the relationship between the financial system and growth?
Historically, economists have held strikingly different views about the importance of the financial system for economic growth (Levine, 1997). On the one hand, John Hicks argued that it played a critical role in England’s industrialization, while Joseph Schumpeter reasoned that well-functioning banks spurred technological innovation by identifying and funding the most innovative entrepreneurs. On the other hand, Joan Robinson felt that where enterprise led, then finance would follow. Levine observed that the pioneers of development economics often did not even mention finance in their work. Gurley and Shaw (1960) identified contributions that finance makes to the economy and Patrick (1966) observed that some countries pursued supply-leading policies which were intended to accelerate growth by expanding the financial system. Goldsmith (1969) is credited with being the first to document the growth in financial activities that occurs with overall growth in the economy, but he hesitated to conclude the direction of causality: Were financial factors responsible for accelerating economic development or did financial development reflect economic growth? Shaw (1973) and McKinnon (1973) were the first to describe how controls and regulations contributed to financial repression, which negatively affects economic growth. Their models were narrowly focused on money, although their descriptive narratives were broader. For example, McKinnon noted the importance of finance by using the example of technology adoption by farmers. He thought economic growth would be slowed without efficient finance because it would be virtually impossible for farmers to self-finance the needed investment to speedily adopt new technologies. Wachtel (2001) noted that McKinnon forcefully argued for financial liberalization and, by 1990, concluded that “there is widespread agreement that flows of saving and investment should be voluntary and significantly decentralized in an open capital market at close to equilibrium interest rates”

CHAPTER ONE
1.0 DISCUSS THE CONCEPT OF FINANCE DEVELOPMENT USING GLOBAL AND DOMESTIC STYLIZZED FACTS
1.1 Concept of Development
Some scholars such as Williamson, Buttrick, Water Crouse, Viner etc. define economic development as the process that brings about permanent increase in per capita income.Other scholars like Meier, Baldwin etc. define economic development as the process leading to long-lasting increase in national income instead of per capita income. Bernard, Okun and W. Richardson define economic development as sustained improvement in wellbeing, which is reflected by increasing flow of goods and services. Simon Kuznets defines economic development as a long term rise in the capacity to supply increasing diverse economic goods to its population, the growing capacity based on advancing technology and the institutional and ideological adjustment that demands. TAYEBWA (1992:261) states that development is a broad term which should not be limited to mean economic development, economic welfare or material wellbeing as per Tayebwa, development in general includes improvements in economic, social and political aspects of whole society like security, culture, social activities and political institutions.According to TODARO (1981:56) refers to development as a multi-dimensional process involving the reorganization and reorientation of the entire economic and social systems. According to PERROUX (1978:65), defines development as "the combination of mental and social changes among the population which decide to increase its real and global products, cumulatively and in sustainable manner." ROGERS (1990:30) adds "development is a long participatory process of social change in the society whose objective is the material and social progress for the majority of population through a better understanding of their environment" Dudley Seers while elaborating on the meanic vng of development suggests that while there can be value judgements on what is development and what is not, it should be a universally acceptable aim of development to make for conditions that lead to a realisation of the potentials of human personality. Seers outlined several conditions that can make for achievement of this aim: The ncapacity to obtain physical necessities, particularly food; A job (not necessarily paid employment) but including studying, working on a family farm or keeping house; Equality, which should be considered an objective in its own right; Participation in government; Belonging to a nation that is truly independent, both economically and politically; and Adequate educational levels. Development means “improvement in country’s economic and social conditions”. More specially, it refers to improvements in way of managing an area’s natural and human resources. In order to create wealth and improve people’s lives.
Amartya Sen has twice changed our thinking about what we mean by development. His ‘capabilities approach’ led to introduction of the UN Human Development Index, and subsequently the Multidimensional Poverty Index, both of which aim to measure development in this broader sense.Then in 1999 Sen moved the goalposts again with his argument that freedoms constitute not only the means but the ends in development. Sen's view is now widely accepted: development must be judged by its impact on people, not only by changes in their income but more generally in terms of their choices, capabilities and freedoms; and we should be concerned about the distribution of these improvements, not just the simple average for a society. Development also carries a connotation of lasting change. But to define development as an improvement in people”s well being does not do justice to what the term means to most of us. Development consists of more than improvements in the well-being of citizens, even broadly

Financial mathematics
Financial mathematics is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory that is involved in financial mathematics. Generally, mathematical finance will derive, and extend, the mathematical or numerical models suggested by financial economics. In terms of practice, mathematical finance also overlaps heavily with the field of computational finance (also known as financial engineering). Arguably, these are largely synonymous, although the latter focuses on application, while the former focuses on modelling and derivation (see: Quantitative analyst). The field is largely focused on the modelling of derivatives, although other important subfields include insurance mathematics and quantitative portfolio problems. See Outline of finance: Mathematical tools; Outline of finance: Derivatives pricing.

Development has traditionally meant achieving sustained rates of growth of income per capita to enable a nation to expand its output at a rate faster than the growth rate of its population. Levels and rates of growth of “real” per capita gross national income (GNI) (monetary growth of GNI per capita minus the rate of inflation) are then used to measure the overall economic well-being of a population—how much of real goods and services is available to the average citizen for consumption and investment. Economic development in the past has also been typically seen in terms of the planned alteration of the structure

CHAPTER THREE
DISCUSS GOVERNMENT FINANCING, ITS SOURCES AND DISCUSS DEVELOPMENT FINANCING IN NIGERIA AND THEIR SOURCES
OVERVIEW OF GOVERNMENT FINANCING
The proper role of government provides a starting point for the analysis of public finance. In theory, under certain circumstances, private markets will allocate goods and services among individuals efficiently (in the sense that no waste occurs and that individual tastes are matching with the economy's productive abilities). If private markets were able to provide efficient outcomes and if the distribution of income were socially acceptable, then there would be little or no scope for government. In many cases, however, conditions for private market efficiency are violated. For example, if many people can enjoy the same good at the same time (non-rival, non-excludable consumption), then private markets may supply too little of that good. National defence is one example of non-rival consumption, or of a public good. "Market failure" occurs when private markets do not allocate goods or services efficiently. The existence of market failure provides an efficiency-based rationale for collective or governmental provision of goods and services. Externalities, public goods, informational advantages, strong economies of scale, and network effects can cause market failures. Public provision via a government or a voluntary association, however, is subject to other inefficiencies, termed "government failure." Under broad assumptions, government decisions about the efficient scope and level of activities can be efficiently separated from decisions about the design of taxation systems (Diamond-Mirlees separation). In this view, public sector programs should be designed to maximize social benefits minus costs (cost-benefit analysis), and then revenues needed to pay for those expenditures should be raised rational investors would apply risk and return to the problem of an investment policy.

Government operations
Government operations are those activities involved in the running of a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements) for the purpose of producing value for the citizens. Government operations have the power to make, and the authority to enforce rules and laws within a civil, corporate, religious, academic, or other organization or group.
Income distribution
• Income distribution – Some forms of government expenditure are specifically intended to transfer income from some groups to others. For example, governments sometimes transfer income to people that have suffered a loss due to natural disaster. Likewise, public pension programs transfer wealth from the young to the old. Other forms of government expenditure which represent purchases of goods and services also have the effect of changing the income distribution. For example, engaging in a war may transfer wealth to certain sectors of society. Public education transfers wealth to families with children in these schools. Public road construction transfers wealth from people that do not use the roads to those people that do (and to those that build the roads).
• Income Security
• Employment insurance
• Health Care
• Public financing of campaigns.
The legal origins puts forward the idea that common law based systems, are better suited than civil law based systems, for the development of capital markets. This is because civil law evolved to protect private property from the authority while common law was developed with the aim of addressing corruption of the judiciary and enhancing the powers of the state. Consequently, it is argued that capital markets developed faster in countries with common law systems than in those with civil law systems. The view that common-law countries have better shareholder protection than civil law countries has been challenged in an important recent study. At such finances are used to developed sound legal system that will eradicate all forms of inefficiency in the market systems. This aspect of financial development has to do with the establishment of sound institutional system that will ensure that the right of everyone is protected. Unlike the civil laws that seek to satisfy the objective of those in power, this aspects of financial development advocates the funding of projects that will look into the origins of different laws that coordinate the production, consumption, and distribution system in every economy, so as to ensure the equitable distribution of resources in the society. Broad-based property rights protection is critical for investors and, consequently, for financial development. It takes central role in the political economy which, however, places little if any emphasis on the origin of the legal system. We may therefore conclude that while there is a broad consensus that a properly functioning legal system that provides effective protection for investors‟ property rights is important for financial development (and growth), the legal origins view is not widely accepted, indeed it has been largely discredited by lawyers.
These contributions, acknowledge the importance of strong institutions for economic growth, but do not focus on financial development per se. They ascribe institutional quality differences to varying initial endowments and dynamic political economy factors.
The initial endowment hypothesis suggests that the disease environment encountered by a country can be a major obstacle for the establishment of institutions that would promote long run prosperity. Thus, it is argued that European colonial powers established extractive institutions that are unsuitable for long-term growth where the environment was unfavourable and institutions that were better suited for growth where they encountered favourable environments.

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