Impact of nigerias external debt on its economic growth. External debt is acquired in order to finance budget deficit and speed up economic activities, hence, external debt should result to economic growth of a nation. The study used both descriptive and econometric tools. Impact of external debt on economic development in nigeria. Cecchetti, mohanty and zampolli the real effects of debt 4 1. A number of researchers have examined the effect of external debt on economic growth since the beginning of the new millennium. Abstract this study examines the impact of external debt on the level of economic growth and the volume of investment in nigeria between 1980 and 2008. This paper investigates the dynamic effects of external debt on economic growth in nigeria from 1970 through 20. The models in this study was used to evaluate the developmental relationship between the independent variables and the dependent variables. We adopt the debt cumgrowth model along with the investment model while the econometrics analysis. The negative impact of external debt on nigeria economic growth hardly come to the mind of the policy makers at the point of contracting the loan. The burden of nigerias external debt is more than the country can bear and the state of economic growth in the country is hampered due to debt crisis.
Pdf effect of external debt on economic growth of nigeria. The necessity for governments to borrow in order to finance a deficit budget has led to the development of external debt. The study postulates that external debt does not contribute to the economic growth of nigeria. The nexus between external debt and economic growth in. The variables used in the study were tested for stationarity using the augmented dickey fuller and philip perron test.
Sulaiman and azeez 2012 used ecm to examine the effect of external debt on economic growth of nigeria. But, when it is used imprudently and in excess, the result can be disaster. The empirical analysis is based on the ardl bound test. Loan or borrowing to fund gaps in government revenue has become norm in subsahara africa especially in nigeria. External debt relief a nd economic growth in nigeria. Determining the optimal public debt threshold for nigeria1. Effects of public external debt and private investment on. Ayadi and ayadi 2008 examined the impact of the huge external debt, with its servicing requirements on economic growth of the nigerian and south african economies. This study examines how the use of budget deficits as an instrument of stabilization leads to the accumulation of external debt with the attending.
The nexus between external debt and economic growth in nigeria 1981 2009. This study examines how the use of budget deficits as an instrument of stabilization leads to the accumulation of external debt with the attending effects on growth in nigeria between 1970 and 2003. The study investigated the impact of external debt on economic growth in nigeria for the period 19802012. Objective of the study the objective of this study is to determine the impact of nigerias external debt on its economic growth. The autoregressive distributed lag ardl model was employed as a technique of estimation in the study and the results led a finding that the external debt contribute negatively to growth in nigeria based on data from 1981 through 2016. Because this led to a great influx of rural people into the larger urban centres. This work evolved out of the zeal to provide an immense understanding of the nigeria economic of debt. They use a solowtype neoclassical growth model to regress the ratio of external debt to gross domestic. Utomi, 2014 investigated the impact of external debt on economic growth in nigeria for the period 19802012. Although the absolute size of the debt, particularly the commercial. Used wisely and in moderation, it clearly improves welfare. This research investigates the impact of external debt on economic growth in nigeria from 19802014 using the vector error correction model. The quest for economic growth and development compelled nigeria to acquire external debt.
External debt and growth dynamics in nigeria adamu 2016. This has informed the need to embark on the present study with a view to investigating the impact of. The effects of external debt management on sustainable. The result showed that the variables are stationary at first differencing. In another single country study, adegbite 2008 investigate the impact that nigerias et al. The debt includes money owed to private commercial banks, other governments, or international financial institutions such as the international monetary fund imf and world bank. Nonlinear relationship between economic growth and domestic debt as % of gdp in nigeria, 2005 2015 figure 2c. The author finds out that there is no causal relationship between external debt and economic growth. This page provides nigeria gdp annual growth rate actual values, historical data, forecast, chart, statistics, economic.
The choice of period was guided by data availability and the the escalation of. Effect of external borrowing and foreign aid on economic. The necessity for governments to borrow in order to finance deficit budgets has led to the development of external debt. International journal of business and social science vol. The imp act of external debt on economic growth and public investment. Research question the study will provide answer to. Nov 10, 2016 this paper therefore is set to investigate the impact of external debt, and domestic debt on economic growth in nigeria between 19702010 through the application of ordinary least square method to establish a simple relationship between the variables under study, augmented dickeyfuller technique in testing the unit root property of the series. Effect of external debt on economic growth of nigeria. Abstract the necessity for governments to borrow in order to finance a deficit budget has led to the development of external debt. Time series data on external debt stock and external debt service was used to capture external debt burden. Determinants of economic growth in nigeria kazeem b. The analysis of unit root was performed on each of the.
Effect of external debt on economic growth and development of. Search, browse and map more than 10,000 projects from 1947 to the present. External debt and domestic debt impact on the growth of the. External balances are fragile to hot money movements, and fiscal buffers are exhausted, making nigerias economy vulnerable to external risks. This paper examined the relationship between external debt and economic growth in nigeria for the period of 19812014.
The case of nigeria, african institute for economic develop ment and planning idep, dakar. Ogunmuyiwa 2011 examined the tendency of external debt to promote economic growth in nigeria with granger causality test. The paper examined the causal nexus between public debt and economic growth in nigeria between 1970 and 2010 using a vector autoregressive var. The impact of external debt on economic growth is a debatable issue between scholars since the onset of the debt crisis in 1980s. This page provides nigeria external debt actual values, historical data, forecast, chart, statistics, economic. This study investigates the effect of the external debt burden on economic growth and development of nigeria. We begin by constructing an external debt sustainability index using principal component analysis to capture the overall effects of external debt indicators on economic growth. This has informed the need to embark on the present study with a view to investigating the impact of external debt on economic growth of nigeria. The study set out to test for both a long run and causal relationship between. The study set out to test for both a long run and causal relationship between external debt and economic growth in nigeria.
Pdf the impact of nigerias external debt on economic. The impact of nigerias external debt on economic development. This study investigates the relationship between nigeria s external debt and economic growth, between 1975 and 2006. External debt and growth dynamics in nigeria adamu. Research hypotheses the study will be guided by the following null hypotheses. The debtors can be the government, corporations or citizens of another country. Information was generated extensively from literature, the nigeria central bank and national bureau of statistic reports. Akujuobi 20o7 concluded that external debts contributed negatively to nigerias economic growth as opposed to domestic debt which contributed positively to nigerias economic growth.
External debt, economic growth, panel data analysis, wamz. Global business, economics, finance and banking, october 1416. Ajide1 this paper investigates the role of frazer economic freedom index on fdi growth relationship over the period spanning 1980 through 2010 using annual time series data. A number of other studies have looked at the impact of external debt on economic growth in developing economies. This paper discusses the subsaharan africa debt problem. Atoyebi kehinde olusegun, olohunlana dapo somod, sulaiman adebayo adeodu, okafor blessing okechi. For individual households and firms, overborrowing leads to bankruptcy and financial ruin. We adopt the debt cum growth model along with the investment model while the econometrics analysis. A multivariate regression approach was employed to estimate augmented growth models.
Economic growth, external debt and budget deficit in. Public debt and growth international monetary fund. External debt is found to be a driver of economic growth if properly managed but its servicing rather than repayment is an inhibiting factor to economic growth. Faculty of social science, department of economics. A series of world oil price increases from 1973 produced rapid economic growth in transportation, construction, manufacturing, and government services.
The relative economic impact associated with the servicing of the external debt is as critical for most african countries as it is for the major latin american debtors. This paper aims to investigate the impact of huge external debt with its servicing requirements on economic growth of the nigerian economy so as to make meaningful inference on the impact of the debt relief which was granted to the country in 2006. Sulaiman and azeez 2012 empirically examined the effect of external debt on the economic growth in nigeria and found that external debt is beneficial to the economy, thus, a unit increase in. Nonlinear relationship between economic growth and external debt as % of gdp in nigeria, 2005 2015. Budget deficits, external debt and economic growth in nigeria osinubi, tokunbo s. According to wikipedia 2018 external debt is the total debt a country owes to foreign creditors. The broad objective of this study was to evaluate the impact of external debt on the development of the nigeria economy within the lifespan of 19852011.
Nigeria public external debt 20082019 data 20202022. Pdf external debt, economic growth and investment in. Rising public debt, and increasingly complex policy interventions by the central bank constrain private sector credit growth. Ppg external debt ratios remain elevated, in part reflecting weaker economic growth in 2016 due to a bad agricultural season and the effects of the political turmoil on tourism during high season. Pdf the impact of external debt on economic growth. Since the late 1960s it has been based primarily on the petroleum industry.
Nigeria in her desperate quest for money to finance economic growth accepted foreign loans under stringent conditions. Limitations in the course of carrying out this study, some problems were encountered which ranges from non availability. Impact of external debt on economic growth in nigeria. Impact of external debt on nigeria economy unibrary. Scope the study is designed to cover the period of 1992 2004 and concentrates only on the external debt in nigeria and also economic growth. A comparative study of nigeria and south africa article pdf available january 2008 with 9,663 reads how we measure reads. Jul 02, 2008 this paper aims to investigate the impact of huge external debt with its servicing requirements on economic growth of the nigerian economy so as to make meaningful inference on the impact of the debt relief which was granted to the country in 2006. The nigerian economy is one of the largest in africa. Economic growth, external debt and budget deficit in jordan. Theoretical perspective of external debt relief and economic growth the position of economic theory on the relationship between external debt relief and economic growth is vital to this study. The current study aims to investigate the impact of economic growth and external debt on budget deficit in jordan for the period 19932017, the study used unit root test, autoregressive distributive lag ardl approach, bound test, to examine the study hypotheses. Shehu and aliyu 20 investigated the contribution of external debt to the economic growth of nigeria for the period 1970 2010 using ordinary least square ols method.