External debt service is major debt variable in economic growth and public debt debate . However , this variable is often ignored in literature. This study investigated the relationship between external debt service and economic growth in Nigeria from 1981 to 2020. A quantitative research approach was adopted for this study. The method for estimation was t he Auto-Regressive Distributed Lags (ARDL) model. The ARDL bound test results showed there was co-integration. The speed of change between the short-run and long-run of the co-integrating equations was 88.86%. The study used debt overhang theory, the neo-classical theory and endogenous theory as the theoretical framework. The study provided evidence of a negative relationship between external debt service and economic growth a lthough this is not statistically significant. The result shows resource depletion effect of external debt services on growth. External debt stock has a positive but not significant relationship with growth. There is a positive but not significant relationship between external reserves to external debt ratio with growth. Debt service to export ratio has a positive relationship with growth. The study recommends that policy makers in Nigeria should develop a methodology to compare the return on external debt to be incurred with the cost of debt so that gains that may eventually offset the cost of debt service. This methodology should be a policy or legislation.
Abbas, S. A., & Christensen, J. E. (2010). The Role of Domestic Debt Markets in Economic Growth: An Empirical Investigation for Low-Income Countries and Emerging Markets. IMF Staff Papers, 57, 209-255. https://doi.org/10.1057/imfsp.2009.24
Abuzaid, L. E. M. (2011). External Debt, Economic Growth and Investment in Egypt, Morocco and Tunisia. Doctoral Dissertation, University of Gloucestershire.
Adamu, I. M., & Rasiah, R. (2016). External Debt and Growth Dynamics in Nigeria. African Development Review, 28, 291-303. https://doi.org/10.1111/1467-8268.12206
Adekunle, W., Adeniyi, O., & Orekoya, S. (2021). Non-Linear Relation between External Debt and Economic Growth in Nigeria: Does the Investment Channel Matter? Iranian Economic Review, 25, 45-56.
àkos, D., & Istvàn, D. (2019). Public Debt and Economic Growth: What Do Neoclassical Growth Models Teach Us? Applied Economics, 51, 104-121.
Ali, R., & Mustafa, U. (2012). External Debt Accumulation and Its Impact on Economic Growth in Pakistan. The Pakistan Development Review, 51, 79-95. https://doi.org/10.30541/v51i4IIpp.79-96
Anderu, K., Omolade, A., & Oguntuase, A. (2019). External Debt and Economic Growth in Nigeria. Journal of African Union Studies, 8, 157-171. https://doi.org/10.31920/2050-4306/2019/8n3a8
Antoine, N., Stanislas, E., & Rollfe, N. (2021). Effects of External Public Debt on Economic Growth: The Case of the Republic of Congo. Open Journal of Business and Management, 9, 1997-2012. https://doi.org/10.4236/ojbm.2021.94108
Awan, A. G., & Qasim, H. (2020). The Impact of External Debt on Economic Growth of Pakistan. Global Journal of Management, Social Sciences and Humanities, 6, 30-61.
Bekun, F. V., & Alola, A. A. (2016). Public Debt and Economic Growth Nexus Revisited: Insights from Nigeria. European Journal of Managerial Research, No. 1, 1-14.
Bulus, G. C. (2020). Growth-Maximizing Public Debt in Turkey: An Empirical Investigation. Economics and Business Review, 6, 68-87. https://doi.org/10.18559/ebr.2020.3.4
Coccia, M. (2017). Asymmetric Paths of Public Debt and of General Government Deficits across Countries within and outside the European Monetary Unification and Economic Policy of Debt Dissolution. The Journal of Economic Asymmetries, 17, 17-31. https://doi.org/10.1016/j.jeca.2016.10.003
Dey, S. R., & Tareque, M. (2020). External Debt and Growth: Role of Stable Macroeconomic Policies. Journal of Economics, Finance and Administrative Science, 25, 185-204. https://doi.org/10.1108/JEFAS-05-2019-0069
Didia, D., & Ayokunle, P. (2020). External Debt, Domestic Debt and Economic Growth: The Case of Nigeria. Advances in Economics and Business, 8, 85-94. https://doi.org/10.13189/aeb.2020.080202
Dombi, á., & Dedák, I. (2019).Public Debt and Economic Growth: What Do Neoclassical Growth Models Teach Us? Applied Economics, 51, 3104-3121. https://doi.org/10.1080/00036846.2018.1508869
El Aboudi, S., & Khanchaoui, I. (2021). Exploring the Impact of Inflation and External Debt on Economic Growth in Morocco: An Empirical Investigation with an ARDL Approach. Asian Economic and Financial Review, 11, 894-907. https://doi.org/10.18488/journal.aefr.2021.1111.894.907
Elhendawy, E. O. (2022). Does External Debt Service Devalue Local Currency in the Long Run? Empirical Evidence from Egypt. International Journal of Economics and Finance, 14, 51-60. https://doi.org/10.5539/ijef.v14n2p51
Elom-Obed, F. O., Odo, S. I., Elom-Obed, O., & Anoke, C. I. (2017). Public Debt and Economic Growth in Nigeria. Asian Research Journal of Arts & Social Sciences, 4, 1-16. https://doi.org/10.9734/ARJASS/2017/36095
Ezema, C. A., Nwekwo, N. M., &Agbaji, B. C. (2018). Impact of External Debt and its Services Burden to Economic Growth in Africa: Econometric Evidence from Nigeria 1990-2016. International Journal of Academic Research in Economics and Management Sciences, 7, 232-250. https://doi.org/10.6007/IJAREMS/v7-i3/4643
Faizulayev, A., Bakitjanovna, K. R., & Wada, I. (2020). Revisiting the Dynamic Impact of External Debt on Economic Growth in Nigeria: Cointegration and Conditional Causality Analysis. Journal of Public Affairs, e2538. https://doi.org/10.1002/pa.2538
Filippakis, N., & Stamatopoulos, T. V. (2021). Public Debt and Economic Growth: A Review of Contemporary Literature. South-Eastern Europe Journal of Economics, 19, 33-50.
Getinet, B., & Ersumo, F. (2020). The Impact of Public External Debt on Economic Growth in Ethiopia: The ARDL Approach to Co-integration. Journal of Economics and Sustainable Development, 11, 25-39.
Gordon, L. B., & Cosimo, M. (2018). Government Debt in EMU Countries. The Journal of Economic Asymmetries, 18, e00096. https://doi.org/10.1016/j.jeca.2018.e00096
Grace, O. O., Oluwayemisi, A. M., & Femi, O. O. (2019). Effect of External Debt on Economic Growth in Nigeria. African Journal of Economics and Sustainable Development, 2, 39-50.
Greiner, A. (2007). An Endogenous Growth Model with Public Capital and Sustainable Government Debt. The Japanese Economic Review, 58, 345-361. https://doi.org/10.1111/j.1468-5876.2007.00394.x
IMF (2017). Debt Sustainability Analysis. https://www.imf.org/external/pubs/ft/dsa/
Karazijienė, Ž. (2015). Critical Analysis of Public Debt and Tendencies of Its Management. Public Policy and Administration, 14, 194-208. https://doi.org/10.13165/VPA-15-14-2-03
Lwanga, M. M., & Mawejje, J. (2014). Macroeconomic Effects of Budget Deficits in Uganda: A VAR-VECM Approach. Advances in Management and Applied Economics, 4, 81-98.
Muhammad, M. A., & Abdullahi, K. (2020). Impact of External Debt Servicing on Economic Growth in Nigeria: An ARDL Approach. International Journal of Business and Technopreneurship, 10, 257-268.
Musibau, H. O., Mahmood, S., Ismail, S., Shamsuddin, Z., & Rashid, N. (2018). Does External Debt Cause Economic Growth? An Experience from ECOWAS Member Countries. International Journal of Academic Research in Business and Social Sciences, 8, 1256-1264. https://doi.org/10.6007/IJARBSS/v8-i11/5167
Ndubuisi, P. (2017). Analysis of the Impact of External Debt on Economic Growth in an Emerging Economy: Evidence from Nigeria. African Research Review, 11, 156-173. https://doi.org/10.4314/afrrev.v11i4.13
Ogbonna, O., Ihemeje, I., Obioma, O., Hanson, H., & Amadi, A. (2021). Impact of External Debt Management on Economic Growth of Nigeria. Journal La Bisecoman, 2, 25-41. https://doi.org/10.37899/journallabisecoman.v2i2.359
Ohiomu, S. (2020). External Debt and Economic Growth Nexus: Empirical Evidence from Nigeria. The American Economist, 65, 330-343. https://doi.org/10.1177/0569434520914862
Owusu-Nantwi, V., & Erickson, C. (2016). Public Debt and Economic Growth in Ghana. African Development Review, 28, 116-126. https://doi.org/10.1111/1467-8268.12174
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16, 289-326. https://doi.org/10.1002/jae.616
Sanni, G. K., Musa, A. U., & Sani, Z. (2019). Current Account Balance and Economic Growth in Nigeria: An Empirical Investigation. Economic and Financial Review, 57, 83-106.
Shrestha, M. B., & Bhatta, G. R. (2018). Selecting Appropriate Methodological Framework for Time Series Data Analysis. The Journal of Finance and Data Science, 4, 71-89. https://doi.org/10.1016/j.jfds.2017.11.001
Ugochukwu, U. S., & Chinyere, U. P. (2013). The Impact of Capital Formation on the Growth of Nigerian Economy. Research Journal of Finance and Accounting, 4, 36-42.
Yusuf, A., & Mohammed, S. (2021). The Impact of Government Debt on Economic Growth in Nigeria. Cogent Economics & Finance, 9, Article ID: 1946249. https://doi.org/10.1080/23322039.2021.1946249