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2022-03-26
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Copyright (c) 2022 Austin Anyanwu, PhD, Prof P.N. Nnamocha, Genevive Akhilomen, PhD
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External Debt Stock And Economic Growth In Nigeria, 1981-2020
Austin Anyanwu, PhD
Imo State University, Owerri
Prof P.N. Nnamocha
Genevive Akhilomen, PhD
Abstract
This study analyzed external debt stock and macro-economic performance in Nigeria for the period 1981-2020. The macro-economic performance indicators used in the study included real gross domestic product, exchange rate and unemployment rate. External debt stock was the primary explanatory variable. Three models were formulated with external debt stock being constant variable in all the three variables while the macro-economic indicators were the control variables in each of the three models. The data were sourced from the Central bank of Nigeria Statistical Bulletin 2020 edition and analyzed using the Ordinary Least Square regression technique. The variables were found to be integrated at first difference but not cointegrated meaning that they have no long run relationship. The findings revealed that external debt stock decreased economic growth significantly. It also increases exchange rate significantly and decreased unemployment rate but not significantly. The study concluded that the decreasing effect of external debt stock on the economy and the fact that external debt stock exerted more strain on the exchange rate puts the Nigerian economy in a tight corner. It was recommended that the Nigerian government should as a matter of urgency decrease Nigeria’s external debt profile by seeking alternative means of funding. The increasing external debt profile has been empirically proven to decrease growth as this situation might be worsened in the long run. There is need to providing foreign exchange to the real sector for foreign trade to ease the strain on exchange rate and as well investing more of the borrowed funds in export goods rather than on consumption.
Author Biography
Prof P.N. Nnamocha
Professor of Economics
Dean of Social Scoences, Imo State University, Owerri, Imo State, Nigeria