Pdf the effect of public debt on economic growth in nigeria. The result showed that the variables are stationary at first differencing. The empirical investigation of the effect of external debt on the economic growth of nigeria shall be restricted to 1970 to 2008 1. Kumar and jaejoon woo july 2010 this paper explores the impact of high public debt on longrun economic growth. A number of researchers have examined the effect of external debt on economic growth since the beginning of the new millennium. However, the issue of public debt and economic growth is not verymuch focused in the context of bangladesh. To assess the impact of government debt on economic growth for 9 latin american countries over a period of 12 years 19741986, geiger 1990 used the. The variables used in the study were tested for stationarity using the augmented dickey fuller and philip perron test. The three economic fundamentals studied include the economic growth, investment and unemployment and the effect of public debt, across the three decades, has been examined on each of the fundamental. Public debt and economic growth public debt arises as a result of budget deficit and the failure of tax revenues to cover projected expenses, and is an instrument used to cover those budget deficits. Effect of external debt on economic growth of nigeria l. The analysis, based on a panel of advanced and emerging economies over almost four decades, takes into. For individual households and firms, overborrowing leads to bankruptcy and financial ruin.
Cecchetti, mohanty and zampolli the real effects of debt 4 1. The remaining part of the study is organized as follows. That the external public debts stocks have no positive impact on the economic growth of nigeria. As old as the origin of the state, public debt is understood as a set of state obligations to third parties and. Some were of the view that external debt accelerates economic growth hameed, ashraf and chandhary, 2008. Effect of external debt on economic growth of nigeria. In the presence of wage rigidities and unemployment, public debt has no effect on the allocation. The impact of public debt on nigerian economy research. From then, the rise in nigerias public debt continued unabated such that as at 2004, total public debt stood at n6,188. The impact of nigerias external debt on economic development.
Economic theory suggests that reasonable levels of borrowing by a developing country are likely to enhance its economic growth19. The study also analyzed the risk and costs associated with public debt in the countries. Global business, economics, finance and banking, october 1416. Effect of external debt on economic growth and development of nigeria ajayi, lawrence boboye. The effect of national debt on economic growth in kenya. Every government borrows either from within its territory or from abroad to finance development projects that would impact her economy. This study examined the effect of public debt on economic growth of nigeria.
This view is in line with neoclassical model of economic growth. This has informed the need to embark on the present study with a view to investigating the impact of external debt on economic growth of nigeria. The effect of government debt and other determinants on. In addition, the study seeks to determine whether there is evidence of a nonlinear impact of public debt on the economy and to identify this critical threshold beyond which public debt impairs economic growth and development. Ayadi and ayadi 2008 examined the impact of the huge external debt, with its servicing requirements on economic growth of the nigerian and south african economies. As a result, this study seeks to assess the effect of external debt on economic growth in nigeria as well as provide further evidences on the impact of debt on the process of growth in nigeria. Time series data on external debt stock and external debt service was used to capture external debt burden. That the public debt stocks have positive impact on the economic growth of nigeria. An empirical analysis of the macroeconomic impact of.
The scope of this study shall cover the public debt trend of nigeria over the years to date. A regression model, descriptive statistics and correlation analysis were used for analyzing the data. Also, some empirical studies sought to pin down and explain the relationship between public debt and growth. Public debt, economic growth, bounds testing, euro area, peripheral euro area. This paper examines the effect of public debt in pakistan since the 1980s to 2014. The study postulates that external debt does not contribute to the economic growth of nigeria. When economic growth is enhanced at least more than 5% growth rate the economys poverty situation is likely to be affected positively3. Determinants of economic growth in nigeria kazeem b. Despite the introduction of diverse debt management strategies and techniques, the rising public debt trend has. In a model with no rigidities and elastic labour supply, public debt has a negative effect on labor supply, investment and economic growth. The aim of this study was to estimate the effect of external public debt on economic growth in four east african countries. Pdf the impact of public debt on economic development of.
Pdf on jan 10, 2017, elomobed favour and others published public debt and economic growth in nigeria find, read and cite all the research you need on researchgate. The choices of period was guided by data availability and escalation of kenyas public debt. However, the link between debt and growth disappears once we instrument debt with a variable that captures. The model built for the study proxy gross domestic product as the endogenous variable measuring economic growth as a function of external debt, ratio of external debt to export, inflation, and exchange rate proxy as the exogenous variables. Impact of external debt on economic growth in nigeria. Against this background, this studyexamines the impact of public debt and its effect on economic growth in nigeria. Public debt, inflation, and economic growth in african. This paper uses an instrumental variable approach to study whether public debt has a causal effect on economic growth in a sample of oecd countries. But, when it is used imprudently and in excess, the result can be disaster. Economic growth, external debt and budget deficit in jordan. Jul 02, 2008 this paper aims to investigate the impact of huge external debt with its servicing requirements on economic growth of the nigerian economy so as to make meaningful inference on the impact of the debt relief which was granted to the country in 2006. The current study aims to investigate the impact of economic growth and external debt on budget deficit in jordan for the period 19932017, the study used unit root test, autoregressive distributive lag ardl approach, bound test, to examine the study hypotheses. Pdf the effect of public debt on economic growth in. The impact of external debt on economic growth is a debatable issue among scholars since the onset of debt crisis in 1980.
In ternal debt only effect a transfer of purchasin g. The impact of public debt on the economic growth of jordan. A multivariate regression approach was employed to. Specifically, the study determined the impact of domestic debt on the economic growth of nigeria. The study investigated the impact of external debt on economic growth in nigeria for the period 19802012. The impact of external debt on economic growth is a debatable issue between scholars since the onset of the debt crisis in 1980s. Pdf this study examined the impact of public debt on economic development of nigeria using annual time series data spanning 1986 to 2014. The study used panel data for the period 1981 to 2014. The effect of public debt on economic growth in nigeria. The first most significant rise in nigerias public debt occurred in 1987 when the total debt rose by 96. The paper examined the causal nexus between public debt and economic growth in nigeria between 1970 and 2010 using a vector autoregressive var. What are the effect of external debt on economic growth of nigeria i.
Greiner 2011 argued that the effect of debt on growth depends on the presence of rigidities in the economy. Effect of external borrowing and foreign aid on economic growth in nigeria ugwuegbe, sebastine ugochukwu1, i. Ajide1 this paper investigates the role of frazer economic freedom index on fdigrowth relationship over the period spanning 1980 through 2010 using annual time series data. The study examines the effect of external debt on the economic growth of nigeria. The effect of external debt on a nations economy has been a subject of controversy among academics. In the light of this, this study assesses the impact of public debt on external reserve in nigeria. Pdf the impact of debt management on the economic growth. This thesis examines whether external debt affects the economic growth of selected heavily indebted poor african countries through the debt overhang and debt crowding out effect. The results are consistent with the existing literature that has found a negative correlation between debt and growth. Public debt, economic growth, internal debt, external debt, square, project created date.
To achieve this goal, the study used a descriptive research design. Theoretical arguments that suggest that high public debt has a negative effect on gdp growth are in line with a growing empirical literature which shows that there is a negative nonlinear correlation between public debt and economic growth in advanced and emerging market economies reinhart and rogoff, 2009, reinhart and rogoff, 2010a. According to world bank external debt means debt owed to non residents, repayable. The main problem is that, kenya government has been relying heavily on public debt, aid and grants as a source of finance. The study set out to test for both a long run and causal relationship between external debt and economic growth in nigeria. This paper will examine specifically, the extent to which variations in nigeria debt structure contributed to the nations economic growth. This paper aims to investigate the impact of huge external debt with its servicing requirements on economic growth of the nigerian economy so as to make meaningful inference on the impact of the debt relief which was granted to the country in 2006. The used secondary data for a period of ten years 20052014, this data obtained from central bank of kenya. While the economic growth rate is likely to have a linear negative impact on the public debttogdp ratio, high levels of public debt are also likely to be deleterious for growth, but potentially after a certain threshold has been reached. This has informed the need to embark on the present study with a view to investigating the impact of. A and akinjare, victoria abosede and oladeji, tolulope and osuma, godswill 2018 the effect of public debt on economic growth in nigeria. The study investigates the effect of public debt on economic growth in kenya, between 198020. Effect of public debt on economic growth of nigeria.
International journal of business and social science vol. Public debt and growth international monetary fund. Used wisely and in moderation, it clearly improves welfare. These included kenya, tanzania, uganda, and rwanda. Effect of external borrowing and foreign aid on economic. Babajide, akinjare victoria, oladeji tolulope and osuma godswill subject. Makame said2 abstract this study investigated the impact of external debt on economic growth of tanzania for the period of 19902010. The quest for economic growth and development compelled nigeria to acquire external debt. The study used time series data on external debt and economic performance. The impact of debt management on the economic growth of nigeria. Doc the effect of public debt on the growth of nigerias. Nigeria is confronted with the issue of limited capital and has to resort to foreign debt in order to augment domestic savings, balance of payment deficits, and shortfall in revenue which induce continuous raise in the debt stock at an alarming rate. Economic growth, external debt and budget deficit in.
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