THE EFFECT OF EXTERNAL DEBT BURDEN ON GROWTH AND POVERTY IN NIGERIA (1980 - 2015)

ABSTRACT

This study analyzes the effect of external debt burden on growth and poverty in Nigeria within the framework of the error correction model, using annual time series data from 1980 - 2015. The study reveals that economic growth and poverty in Nigeria and their hypothesized determinant are generally I (1) series, with one co-integration equations existing among their linear combinations. Our results show that, the variables in the model, debt overhang, stock of external debt, and public debt service are positively related to increase gross domestic product in model 1, while in model two only external debt stocks is positively related to poverty as proxy with per-capital real gross domestic product in the country. Overall the variables account for 65% and 63% of the variation in gross domestic product and poverty and they are highly significant at 5% as shown by the F-statistic (p < 0.05). The coefficient of the ECM behaved well in both model, having its expected negative sign and is significant at 5%. However, the speed of adjustment is relatively high in model two. In order to increase the level of economic growth and thus reduce the poverty, the following recommendations are made: A conducive macroeconomic policy environment, Improve political and social stability, Reduction of hassle costs and Sound fiscal policy

• TABLE OF CONTENTS

  Pages

  Title Page

  Certification ii

  Dedication iii

  Acknowledgements iv

  Abstract v

  Table of Contents vi

  List of Tables viii

  List of Figures ix

  CHAPTER ONE: INTRODUCTION

  1.1 Background of the Study 1

  1.2 Statement of the Problem 3

  1.3 Objectives of the Study 5

  1.4 Research Questions 5

  1.5 Research Hypotheses 6

  1.6 Significant of the Study 7

  1.7 Scope of the Study 7

  1.8 Organization of the study 8

  1.9 Definition of Terms 8

  CHAPTER TWO: LITERATURE REVIEW

  2.1 Conceptual and Theoretical Review 8
• 2.2 Empirical Review 14

  2.3 Implication of Review on the Current Study 19

  CHAPTER THREE: THEORETICAL FRAMEWORK AND METHODOLOGY

  3.0 Introduction 20

  3.1 Model Specification 20

  3.2 Explanation of variable 22

  3.3 Estimation technique and unit root test 23

  3.4 Source and measurement of data 23

  CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

  4.1 Presentation of Results 26

  4.2 Discussion of Results 36

  4.3 Comparison of Results with Previous Studies 39

  4.4 Summary of Findings

  CHAPTER FIVE: SUMMARY RECOMMENDATIONS AND CONCLUSION

  5.1 Summary 41

  5.2 Conclusion 42

  5.3 Recommendations 42

  5.4 Limitations of the Study 43

  5.5 Suggestions for Further Study 43

  References 44

  Appendix