Revista Internacional de Economia e Ciências de Gestão

The Relationship between External Debt and Economic Growth in Nigeria

Abstract

Victor Ushahemba Ijirshar, Fefa Joseph and Mile Godoo

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. This paper examined the relationship between external debt and economic growth in Nigeria for the period of 1981-2014. The study used both descriptive and econometric tools. The analysis of unit root was performed on each of the variables incorporated in the model and the result showed that, all the variables were not stationary at level but achieved stationary after first difference at 5% level of significance. The regression results showed a significant relationship between external debt and economic growth in Nigeria. However, external debt stock impacted positively while external debt service impacted negatively on the annual growth rate of the Nigerian economy both in the long run and the short run.