Title:
EXTERNAL DEBT AND ECONOMIC GROWTH IN NIGERIA: IS THERE A NEXUS?

Authors:
MOKUOLU Joseph Oluseye, Nigeria

Abstract:

This study investigates the nexus between external debt and economic growth in Nigeria drawing inference from 1986 to2014. The study Employ Error Correction Mechanism to analyze time series data culled on Gross Domestic Product (GDP),Debt Service Payment (DSP), External Reserve (ERS)and Interest Rate(INT). The empirical findings revealed that all the independent variables (ERS, INT and DSP) are significant in explaining the dependent variable (GDP) in the long run. The coefficient of all the variables are negative except DSP that is positively signed. Furthermore, all the explanatory variables are significant in explaining economic growth in the long run. The coefficient of multiple determination (R Squared) as obtained from the parsimonious model is 47% which simply implies that the variables of external debt (DSP, ERS and INT) all put together accounted for 47% variation in GDP while the other 53% is due to the presence of disturbance mean in the model. Conclusively, findings in the study revealed that Nigeria should implement policies that could increase external reserve treasures by increasing export. This will in turn relief debt profile of the country. For the benefits of external debt to be enjoyed, the study recommend that government should ensure economic and political stability and reduce the debt burden to the minimal to enhance the effect on economic growth.