IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 2 NO. 5 2016

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Exploring the Dynamics of External Debt Stock and Servicing on the Nigerian Economic Growth Rate

Adamgbo, Suka Lenu Charles

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Abstract

This study attempt to econometrically explore the relationship between external debt stock, external debt servicing and economic growth rate in Nigeria proxy by GDP within the period of 1981to 2010. The study used Nigeria time series data for the period under review. The OLS, ADF Unit Roots, Co-integration and the Error Correction Mechanism (ECM) tests were applied on the data. The results revealed a negative relationship between external debt stock (DS) ,external debt servicing(XDS) and GDP. Similarly, it was also revealed that there exists presence of both short and long-run equilibrium relationship among the variables. The ECM coefficient indicates that the explained variable adjust fairly to influences the explanatory variables. Hence, it is recommended that the Nigeria government should strengthened existing debt management strategies and if possible explore new ones aim at curtailing external finance thereby avoiding its negative on economic growth rate in Nigeria, ensure proper utilization of contracted loans into priority projects in the form of investment to accelerate economic growth.

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