Effect of External Debt on Economic Growth in Nigeria

Filed in Current Projects, Economics Project Topic by on October 19, 2020

Effect of External Debt on Economic Growth in Nigeria

INTRODUCTION

Sustainable economic growth is a major concern for any sovereign nation most especially the Less Developed Countries (LDCs) , which are characterized by low capital formation due to low levels of domestic savings and investment (Adepoju, Salau and Obayelu, 2007).

It is expected that these LDC’s when facing a scarcity of capital would resort to borrowing from external sources so as to supplement domestic saving (Aluko and Arowolo, 2010; Safdari and Mehrizi, 2011; Sulaiman and Azeez, 2011).

Soludo (2003) asserted that countries borrow for two broad reasons; macroeconomic reason  that is to finance higher level of consumption and  investment or to finance transitory balance of payment deficit and avoid budget constraint so as to boost economic growth and  reduce poverty.

The constant need for governments to borrow in order to finance budget deficit has led to the creation of external debt (Osinubi and Olaleru, 2006).

External debt is a major source of public receipts and financing capital accumulation in any economy (Adepoju et al, 2007).

  REFERENCES

Adepoju, A.A, Salau, A.S and Obayelu, A.E (2007). The Effects of External Debt Management on Sustainable Economic Growth and Development: Lessons from Nigeria. Ibadan: Heinemann  Educational Books (Nig.) Plc.

Adesola, W.A. (2009). Debt Servicing and Economic Growth and Public Investment: The Case  of Nigeria. Journal of Social Sciences. 8(2). Calabar: University of Calabar press.

Ahamed, A. (2004). Short and Medium Term Approaches to Solving African Debt Problems.  Central Bank of Nigeria Bullion. 12(22). Lagos: Prime Publishers.         

Ajayi, K. (2000). The Feasibility of Democracy in Africa. Dakar: Codesria Books.

Ajayi, L. and Oke, M. (2012). External Debt and Economic Growth in Developing and  Industrial Countries. Columbia University: Department of economics.

Aluko, F. and Arowolo, D. (2010). Foreign Aid, the Third World Debt Crisis and the Implication  for Economic Development: The Nigerian Experience. African Journal of Political Science and International Relations. 4(4), 120-127.

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