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| An Exposé Into The Impact Of External Debt On The Standard Of Living In Nigeria
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Uguta, Lawrence Ebiwari (M.Sc), Dr. Amanawa, David Ebiegberi, Dr. Awu, Ebiasuode, Dr. Darius, Blessing
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Abstract:
The study investigates the effect of external debt on Nigeria's living standard (1984 to 2014); examining the effect of foreign debt on an average Nigerian's standard of living is the primary goal of the study.The variables of the study are external debt (external debt stock, external debt servicing, exchange rate, infrastructural development (INFR), and per capita income (PCI). Econometric techniques, including Augmented Dickey-Fuller and P.P. for unit root tests, Johansson co-integration technique for a long-run relationship, Granger causality test, and Ordinary Least Square (O.L.S.) regression analysis was used to test the four hypotheses. The study revealed that although external debt stock has a positive effect on economic development, its serving conditions are opposed to the standard of living of an average Nigerian. This position is even aggravated by the unfavorable exchange rate experienced by Nigerian citizens. The study also reveals that the proportion of external borrowing expended on infrastructural development does not significantly affect Nigeria's economic growth. The study thus concludes that external debt harms Nigeria's economic growth and has not helped improve Nigeria's standard of living (per capita income). Among the recommendations is that the nation should commit its external borrowing on priority projects capable of generating revenue that will not only produce a favorable servicing platform but also free resources for improving the standard of living of an average Nigerian citizen.
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