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Foreign Debt Management and the Development of Nigeria Economy

Author

Listed:
  • Mayowa Gabriel AJAO

    (Faculty of Management Sciences, University of Benin, Nigeria)

  • Aigbedo Omorose OGIEMUDIA

    (Faculty of Management Sciences, University of Benin, Nigeria)

Abstract

This study reviews the effect of foreign debt management on sustainable economic development with specific emphasis on Nigeria over the period of 1979?2009. Data analysis shows that access to external finances strongly influence the economic development process of Nigeria and other nations. The ordinary least square multiple regression analytical method is use to examine the relationship between external debt management and economic development, while error correction model (ECM) is use to determine the long-run and short run dynamics among the relevant variables. The empirical result shows that there is a significant relationship between external debt and economic development in Nigeria, external debt stock contributes significantly to Nigeria GDP while debt servicing had a negative but insignificant impact on Nigeria GDP. The results also reveal that external debt stock and debt servicing had a mix delay effect on the Nigerian economy. Debt can only be productive if well managed in an environment with sound macroeconomic policies which is an important prerequisite for the development of an economy.

Suggested Citation

  • Mayowa Gabriel AJAO & Aigbedo Omorose OGIEMUDIA, 2013. "Foreign Debt Management and the Development of Nigeria Economy," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 99-109, February.
    • Handle: RePEc:bap:journl:130110
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    References listed on IDEAS

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    4. Hector Butts, 2009. "Short Term External Debt and Economic Growth—Granger Causality: Evidence from Latin America and the Caribbean," The Review of Black Political Economy, Springer;National Economic Association, vol. 36(2), pages 93-111, June.
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    More about this item

    Keywords

    Debt management; Economic development; ECM; Nigeria;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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