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An empirical analysis of the impact of external borrowing on economic performance of Nigeria


  • Angahar, Jacob
  • Ogwuche, Peter
  • Olalere, Victor


The study, which relied on secondary data, investigated the relationship between foreign borrowing and economics growth in Nigeria. The study employed both the quantitative and qualitative methods in analysing the data. This is a major gap the study filled up amidst existing literature as it adopted its own structural and working equation models peculiar to growth and development in Nigerian economy. The study adopted Ordinary Least Square (OLS) method, Augmented Dickey-Fuller (ADF) Unit Root test, Johansen Co-integration test and Error Correction Method (ECM). The estimation technique follows a three-step modelling procedure. The estimates indicate that there is an overall; a long run relationship exists among the variables. Conclusively, the result shows that external debt burden is an important factor indicator that influences the level of economic activities in Nigeria.

Suggested Citation

  • Angahar, Jacob & Ogwuche, Peter & Olalere, Victor, 2015. "An empirical analysis of the impact of external borrowing on economic performance of Nigeria," MPRA Paper 68108, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:68108

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    References listed on IDEAS

    1. Jonathan Eaton & Mark Gersovitz, 1981. "Debt with Potential Repudiation: Theoretical and Empirical Analysis," Review of Economic Studies, Oxford University Press, vol. 48(2), pages 289-309.
    2. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    3. Toan Quoc Nguyen & Benedict J. Clements & Rina Bhattacharya, 2003. "External Debt, Public Investment, and Growth in Low-Income Countries," IMF Working Papers 03/249, International Monetary Fund.
    4. Were, Maureen, 2001. "The Impact of External Debt on Economic Growth in Kenya: An Empirical Assessment," WIDER Working Paper Series 116, World Institute for Development Economic Research (UNU-WIDER).
    5. Osinubi, T.S. & Olaleru, O.E., 2006. "Budget Deficits, External Debt And Economic Growth In Nigeria," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(3).
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    More about this item


    External debt; Economic growth and development; External borrowing foreign direct investment; and political stability;

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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