External Debt and Nigeria’s Economic Growth
External Debt and Nigeria’s Economic Growth

Summary/Abstract: The study examines the nature and effectiveness of external debt management in Nigeria,with emphases on how external debt and external debt servicing affect the economy. There is robust empirical evidence on the relationship between external debt and Economic growth in other countries while scanty evidences exist in Nigeria, hence this study is carried out to compliment prior Nigerian studies, using some different variables. Annual data having time series properties on external debt, external debt service, external reserve, exchange rate, foreign direct investment and economic growth proxy by changes in RGDP from 1981 to 2017, sourced from the statistical bulletin issued by the Central Bank of Nigeria (CBN) were analyzed, using both descriptive statistics and error correction model. The managers of the Nigerian economy, Debt management office, Ministry of finance and investors would find this study beneficial in resolving the challenges of Nigeria’s growing debt profile. Analyses revealed that the effect of External Debt on Nigeria’s economic growth is negative and insignificant in the short run while a significant negative effect was observed in the long run. Stimulated by our findings, we conclude that Nigeria has not begun to reap significantly, from efficient sourcing and effective utilization of external debt, as its influence on economic growth of the country in both short and long run period considered in this study is negative.

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