IMPACT OF EXTERNAL DEBT ON INCLUSIVE GROWTH IN NIGERIA

Abstract

The study examined the impact of external debt on inclusive growth in Nigeria over the period of 1981 to 2016. This study employed Zivot Andrew unit root test with breaks to determine the order of integration of the variables used. Debt overhang and crowding out effect were used to capture the external debt, and a dummy variable was used to capture the debt forgiveness of 2005. The unit root test results show that all the variables were integrated of order zero I(0). The regression results revealed that crowding out variable has negative significant effect on inclusive growth. The results also revealed that debt relief of 2005 shows a positive and significant effect on inclusive growth. The study recommends that fiscal discipline is required, not only to reverse the excessive external debt but also to ensure that foreign debts are productively utilized to achieve inclusive growth in Nigeria