THE EFFECT OF EXTERNAL DEBT ON THE ECONOMIC GROWTH OF NIGERIA 2000-2018
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This study examined the effect of external debt on the economic growth of Nigeria. Secondary data was used for the study and it was obtained from the financial statement of the Central Bank of Nigeria for the period 2000-2018. The unit root property of the data was analyzed using the Augmented Dickey Fuller Test (ADF)and the variables were all stationary at level. In absence o cointegration Ordinary Least Square regression analysis was used to examine the effect of the independent variables on the dependent variables of the model. The statistical significance of the estimated parameters is checked by an F-test of the overall fit. The result of the regression analysis revealed that External Debt Stock (EDS) has a positive and statistically significant (p<0.05) effect on Economic Growth in Nigeria. This is against a priori expectation. Debt Service Payment (DSP) was found to have a negative effect on Economic Growth and the relationship is statistically significant (p<0.05) but not in line with a priori expectation. Government Expenditure (GEX) was found to have a positive effect on Economic Growth and the relationship is statistically significant (p<0.05) and in line with a priori expectation. The value of the R-squared (0.854830) indicates that about 85.48% of the total variation in the dependent variable is explained by the independent variables. Also given that the probability value of the F-statistic (0.000002) indicates that the independent variables of the study statistically predicts the dependent variable of the study. It was concluded that external debt has not been well utilized in Nigeria. It was recommended among others that external debts should be contracted solely for economic reasons and not for social or political reasons. This is to avoid accumulation of external debt stock overtime and prevent an obscuring of the motive behind external debt.
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