The impact of external debt on economic growth and public investment :the case of Nigeria
In Nigeria, using the social and economic indicators, debt overhang is the major factor that has contributed largely to the poor performance of the Nigeria economy. The debt service burden has militated against the country rapid economic development and worsens the social problems. Service delivery by key institutions designed to mitigate the living condition of vulnerable groups were hampered by decaying infrastructure due to poor funding. By cutting down expenditure on social and economic infrastructure, the government appears to have also constrained private sector investment and growth through lost externalities. This has reduced total investment, since public investment is significant proportion of the total investment in the country. The objective of the study is to examine the impact of external debt on economic growth and public investment in Nigeria from 1970-2002. For these reasons two hypotheses were tested. First, the external debt service has a negative impact on economic growth. Secondly, there is a negative correlation between external debt overhang and public investment. The paper concludes that encouraging alternative financing through foreign direct investment, portfolio investment, and non-guarantee private debt is the feasible long-run solution to the Nigeria, external debt problems. Nigeria still has a chance of overcoming her external debt problems by cultivating the right policies.
| Format: | Technical paper biblioteca |
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| Language: | eng |
| Published: |
2004-06
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| Online Access: | https://hdl.handle.net/10855/42296 |
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