The Role of Non-Governmental Organizations in Community Economic Development: Using a System Dynamic Approach

Abstract

Non-governmental organizations (NGOs) are essential institutional players in mobilizing regional economic growth and development, community growth and development, motivating people, and implementing social welfare program(s) to support government effort(s) at the grassroots level. This paper explores the impact of NGOs on rural community development while referencing the case study of the community of Lugbe, in the city Abuja, Federal Capital Territory (FCT), Nigeria. This paper utilizes the NGO-Donation-system dynamics model ( , to explore, visualize, and analyze the following dilemmas of NGOs donations responsiveness to Nigeria's per capita income, returns on foreign capital, and the returns on local capital. It analyzes two sensitivity scenarios from the base  (see Figure 1). The findings show how NGOs activities result in fostering economic growth and development in the community. Our results show that if Local Returns on Capital (  are greater than Foreign Returns on Capital ( , there will be a higher inflow of Foreign Direct Investment (  into the nation and vice versa. Hence, if the later statement holds to be true, the cost-effectiveness for individuals and businesses to donate or invest in the country will decrease (see Figure 3).  But, if the former statement is true, there will be zero donations into NGOs as long as individual per capita income is below the Income Threshold to Donate (  and companies make zero economic profits in their businesses. The  is between $0 - $ 13,000. But, when the individual per capita income or a business net economic profit is between $ 14,000 - $ 80,000, which is above , donations and investments will increase until the point when it peaks and starts to decrease (see Figure 4). Further result(s) show that the involvement of NGOs in societies where citizens are underserved by the financial, educational, entrepreneurial, political, and health industries have a normal distribution relationship shaped curve for the labor force per capita income threshold, an inverse relationship on returns on  and a positive returns on . The participation of NGOs in communities, ceteris paribus, has had a significant positive effect on the Nigerian economy, but the research does not overlook mistakes made by these NGOs in trying to solve wicked problems in an economy.

Keywords: community, development, NGOs, Local Returns on Capital ( , Foreign Returns on Capital ( , Foreign, Direct Investment ( ,  and Income threshold to donate ( ).

DOI: 10.7176/JESD/10-20-01

Publication date:October 31^st 2019