FOREIGN DEBT AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT

This study used cointegration and an ECM technique to assess the effects of foreign debt on the Nigerian economy from 1983 to 2022. A model was created and estimating was done with this goal in mind. Foreign debt and capital stock have a positive and considerable impact on GDP growth rate, according to the ECM estimation output. In addition to the secondary school enrollment rate, the exchange rate had a negative and considerable impact on GDPGR (thought this was also not statistically significant). With a speed of adjustment of roughly 53%, the error correction term is statistically significant and negatively signed. Cumulative sum of recursive residuals (CUSUM) and cumulative sum of recursive residuals squares were used to confirm the model's structural stability (CUSUM of Squares). The use of foreign loans was then advised for decision-makers looking for funding for growth and development initiatives in Nigeria