External Debt and Economic Growth in Nigeria: An ARDL Approach

This article investigated the effect of external debt on economic growth in Nigeria. Specifically, the focus was on the long run and short run effects of external debt and economic growth and the challenges identified in Nigeria. The paper employed Auto Regressive Distributed Lag (ARDL) to address the specific objective. The study has revealed that external debt has a direct and significant impact on economic growth in the short run and indirect significant relationship in the long run in Nigeria. The article recommends that government should implement tax reforms, improve revenue collection efficiency, and reduce fiscal dependence on oil revenues in the long run. Given the direct and significant impact of external debt on economic growth in the short run observed in the study, government should strengthen the project evaluation and selection process to ensure external loans target sectors with measurable economic impact.