Athanasius C. Nwachukwu, Okechukwu J. Irokwe


From 1980 to 2019, the time series of this study which examined external debt and its impact on Nigerian economic growth. The study's dependent variable was real GDP. The study was premised on the debt-cum growth hypothesis. The data were subjected to econometric analysis using unit root, cointegration, and error correction models. Government capital spending, which measures how much borrowed money was used, had a positive but minor impact on economic growth. Although the inflation rate had a negative impact on the external debt – growth nexus, the exchange rate significantly increased growth. According to the study, borrowing funds and investing them in capital spending increased Nigeria's growth. The important variable exchange rate in the model of external debt, was significant and positive, indicating that Nigeria's controlled floating exchange rate system, if properly implemented, could lead to the desired economic growth. The findings found encouraging signals of foreign liability in the Nigerian economy's growth, but necessary care should be made to limit external funds borrowed to soften inflation effect and an expanding debt profile, the large debt servicing that comes with it. As a result, productive sectors should be allocated the external debt, and government focus should be on raising cash domestically rather than accumulating massive external debt.


Economic growth, External debt, real gross domestic product, external debt servicing, exchange rate, inflation rate

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