Impacts of External Debt and Investment on Economic Growth in Nigeria

Abstract

This study examines the effect of external debt and investment on Nigerian economic growth between 1981 and 2019. The study employed time series data sourced from the World Development Indicator and CBN’s statistical bulletin and other sources using Auto-regressive distributed lags (ARDL) Bound test to test the relationship between external debt, investment and Economic growth in Nigeria and Granger causality was also employed to determine the causality among external debt, investment and Nigerian economic growth spanning for 38 years. The result establishes a long run association among external debt, investment, labour and Nigerian economic growth and also found out non-causality between foreign external debt, investment labour productivity and Nigerian economic growth. From the result of this research, it is therefore recommended that Nigerian government should however make concerted effort to ensure that external debt and investment are harnessed to positively impact economic growth.And also for a country like Nigeria to benefit most from FDI inflows, a method that targets enhancing FDI in more productive sectors like agriculture and manufacturing, and further cooperation with multinational enterprises is needed. It is thus recommended that the government maintain its efforts in diplomacy to provide suitable environment for FDI.