External Debt and Economic Growth: Evidence from Nigeria
External Debt and Economic Growth: Evidence from Nigeria

Summary/Abstract: The study examined the impact of external debt on economic growth in Nigeria for theperiod 1981-2014 based on annual data sourced from the Central Bank of Nigeria (CBN) StatisticalBulletin (various issues) and abstract of National Bureau of Statistics (NBS). The researcherexamined the existence of Co-integration among the underlying variables using Auto-regressiveDistributed Lag (ARDL) model after conducting preliminary statistical test to ascertain the normalityof the variables as well as stationary of the data set using descriptive and unit root tests. The result ofthe ARDL test shows that a significant relationship exists between external debt and economic growthboth at the long and short run. The study also examined the causality among the variables usingGranger causality test and observed that no causality exist among the variables. The study thereforerecommends that government should ensure that loans obtained are used to finance profitable projectsthat would generate reasonable amount of revenue to service the debts and also adequate record ofdebt payment obligations should be kept and debt should not be allowed to exceed a maximum limitin order to prevent debt overhang.

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