Nigeria’s External Debt and Economic Growth: An Error Correction Approach

Ezeabasili, Vincent N.; Isu, Hamilton O.; Mojekwu, J. N.

doi:10.5539/ijbm.v6n5p156

Cited by 47 publications

(38 citation statements)

References 16 publications

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“…This result aligns with Obademi (2013) and Vincent, Hamilton and Joseph (2011). The short run error correction model which shows a negative relationship between external debt and economic growth in Nigeria is in tandem with Mayowa and Aigbedo (2012).…”

Section: Discussion Of Findingssupporting

confidence: 66%

External Debt and Nigerian Economic Growth Connection: Evidence from Autoregressive Distributed Lag Approach

Onakoya¹,

Ogunade²

2017

JEDS

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This study examined the impact of external debt in bridging the gap resource required for economic growth in Nigeria. After preliminary evaluation of the data which indicated the non-normality of all the variables, the research deployed the Autoregressive Bounds testing method Distributed Lag (ARDL) method using the Ordinary Least Squares technique. Evidence of long run association was reported. The follow-up error correction mechanism found out that 45 present of disequilibrium errors are corrected after short run shock. External debt is negatively related to economic growth. On the average, one per cent increase in export will decrease the real GDP by 0.25 per cent in the long run. Although statistically significant at 1 per cent it did not fill savings and/or external finance gap. Furthermore, the pairwise granger causality test showed that external debt does not cause economic growth at 5% level of significance. The study recommended that adequatemeasures be put in place to ensure that borrowed funds are expended on development-promoting capital projects. In addition, appropriate institutional checks and balances on government fiscal performances are prerequisite for analyzing and managing public investment projects

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Section: Discussion Of Findingssupporting

confidence: 66%

External Debt and Nigerian Economic Growth Connection: Evidence from Autoregressive Distributed Lag Approach

Onakoya¹,

Ogunade²

2017

JEDS

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“…Debt payment to Paris Club creditors and debt payment to promissory notes holders/are positively related to GDP and GFCF, while debt payment to London Club creditors and other creditors showed a negative significant relation to GDP and GFCF. Ezeabasili, Isu, and Mojekwu, (2011) investigated the relationship between Nigeria's external debt and economic growth between 1975 and 2006 applying econometric analyses. The result of the error correction estimates revealed that external-debt has negative relationship with economic growth in Nigeria.…”

Section: Empirical Literaturementioning

confidence: 99%

Analysis of the Impact of External Debt on Economic Growth in an Emerging Economy: Evidence from Nigeria

Ndubuisi¹

2017

Afr. Res. Rev.

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This study set out to analyse the impact of external debt on economic growth of Nigeria. Data for the study are collected from secondary sources. The variables on which data are collected include; Gross Domestic Product, External debt services, external debt stock, external reserve, and exchange rate. The scope of the study covers the period from 1985 to 2015. Data are analysed using the ordinary least square regression, ADF unit root test, Johansen cointegration and error correction test. Findings reveal that debt service payment has negative and insignificant impact on Nigeria's economic growth while external debt stock has positive and significant effect on Nigeria's growth index. The control variables: external reserve and exchange rate have positive and significant effect on growth. The ADF unit root test shows that all the variables are not stationary at levels but at first difference. Johansen cointegration test shows long-run relationship between external debt and growth index (GDP). It also showsed that the variables have at least one common stochastic trend driving the relationship between them. The causality test indicates unidirectional causality between external debt and GDP. From the findings, the study recommended that government should apply external loans to infrastructural development; improve business environment through legislation; initiate proper debt management policies and substitute external borrowing for human capital development.

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“…The result showed that external debt has contributed positively to Nigeria economy. This was supported by Ezeabasili, Isu, and Mojekwu, (2011) who examine the relationship between Nigeria"s external debt and economic growth between1975-2006, with an error correction approach. Error correction estimate revealed that external debt has negative relationship with economic growth in Nigeria.…”

Section: Empirical Reviewmentioning

confidence: 91%

Assessment of the Impact of External Borrowing on the Economic Growth of the Developing Countries - Nigerian Experience

Akinwunmi¹,

Adekoya²

2018

ABR

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This paper examines the impact of foreign borrowing on the economic growth of the developing nations using Nigeria as a case study. Time series data from 1985 and 2015 were sourced from Central Bank of Nigeria Statistical Bulletin and other related journals. Data sourced were analyzed using Durbin Watson auto correlation to test for the reliability of the data and diagnostic tests such as unit root test (Augmented Dickey Fuller) and Johansen co-integration to test for the non-stationary of the data and long run relationship between the dependent and independent variables. OLS multiple regressions were used as estimation technique to test for the relationship between the explanatory variables and economic growth. The study revealed that there is significant relationship between economic growth, exports, capital investment and debt service payment but external debt and exchange rate have a significant inverse relationship with economic growth. The study concludes that, capital investment, exports and debt service payment have impact on economic growth but external debt and exchange rate do not. Therefore, the study recommends that, purpose of borrowing should be considered important while channeling the borrowed funds and efficient utilization of the funds to solve the purpose by which it was acquired will go a long way to impact growth on the economy of the country.

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Nigeria’s External Debt and Economic Growth: An Error Correction Approach

Cited by 47 publications

References 16 publications

External Debt and Nigerian Economic Growth Connection: Evidence from Autoregressive Distributed Lag Approach

External Debt and Nigerian Economic Growth Connection: Evidence from Autoregressive Distributed Lag Approach

Analysis of the Impact of External Debt on Economic Growth in an Emerging Economy: Evidence from Nigeria

Assessment of the Impact of External Borrowing on the Economic Growth of the Developing Countries - Nigerian Experience

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