Publisher: Centre For Social Science Research, Enugu

Responsiveness of Economic Growth To External Debt In Nigeria

Clifford E. Ezinwa, Gabriel A. Anidiobu, Dr. Bertram O. Agu
KEYWORDS: Gross Domestic Product, External Debt Stock, External Debt Service Payment, Foreign Exchange Rate


This study focused on responsiveness of economic growth to foreign debt in Nigeria, 1986-2013. Specifically, the study sought to: (i) ascertain whether economic growth positively responds to external debt, and (ii) determine whether economic growth significantly responds to external debt. The study adopted ex-post facto design. Annual time series data for 28 years (1986-2013) were generated from the Central Bank of Nigeria Statistical Bulletin, National Bureau of Statistics (NBS) and Debt Management Office (DMO). A preliminary test was conducted using Augmented Dickey- Fuller (ADF) to ascertain data stationarity so as to forestall obtaining spurious regression results. Ordinary Least Squares (OLS) method was used to estimate the variables. External debt stock (EDS), External debt service payment (EDSP) and Foreign exchange rate (FEXR) were applied as explanatory variables, while real gross domestic product (RGDP) formed the dependent variable. Decisions were anchored on a 5% level of significance. The study discovered as follows that: (i)GDP negatively responded to external debt stock, and (ii) GDP had a non-significant response to external debt stock. Based on the findings, the study recommended that external debt can drive economic growth if fiscal discipline and high sense of responsibility is maintained by leaders in managing public funds. Secondly, efforts should be geared toward increased credit delivery (including borrowed funds) to the productive sectors capable of stimulating the economy

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