ABSTRACT

The totality of the content of this study is a retrospective study in the impact and nature of Economic debt and Economic growth in Nigeria from 1970-2015. The general objective of this study was to evaluate the link between external debt and economic growth in Nigeria, while the the specific objectives were to; investigate if there is any long run significant relationship existing between external debt and economic growth in Nigeria, find out if there exist any significant causal relationship between external debt and economic growth in Nigeria. In the model specified, Real Gross Domestic Product was a function of external debt, debt repayment to GD? ratio and external rate. We used the cointegration to investigate the effect of external debt stork on the economic growth of Nigeria within the period under study. The results indicate one cointegrating equation, meaning that there exist a significant long run relationship between external debt and economic growth in Nigeria. The results further revealed that there is a significant causality flowing real gross domestic product to external debt. This suggests that there is cra:e for foreign goods while that running from external debt to RGDP was observed to be significant within the period under study. It is concluded that there is significant causal relationship between external debt and economic growth in Nigeria. In the light of the findings, external debt should be contracted solely for economic reasons and not for social and political reasons. This is to avoid accumulation of external debt stork in the long run and prevent an obscuring of the motive behind external debt. More so, Nigerian Government should promote the in crease of national output for export as a high exchange rate will make our goods more attractive in the foreign market and will increase foreign exchange earnings, thereby reducing the propensity to borrowing externally.