The document discusses Nigeria's external debt crisis from the 1980s until receiving debt relief in 2005. It examines the causes of Nigeria's growing external debt, including lack of fiscal discipline, overdependence on oil revenue, and poor project implementation. The debt crisis led to slow economic growth and development in Nigeria as significant resources were diverted to debt servicing instead of social spending. While debt relief reduced Nigeria's debt levels, economic growth and development did not improve as much as desired, suggesting the need for stricter debt management policies to prevent future debt crises.
External debt, economic growth and investment in nigeriaAlexander Decker
This document summarizes a study that examines the impact of external debt on economic growth and investment in Nigeria from 1980 to 2008. The study uses debt-cum-growth and investment models and multiple regression analysis. The results show a positive relationship between external debt, economic growth, and investment, with a high coefficient of determination of about 79.8%. However, private investment, a measure of real development, shows a decline. The study recommends that government ensure borrowed funds are used optimally to avoid economic crises and reduce private investment, which is key to growth.
THE EFFECT OF EXTERNAL DEBT ON ECONOMIC GROWTH OF NIGERIA[1]Chinelo Ezenwa
This document is a title page for a student project on analyzing the effect of external debt on Nigeria's economic growth from 1981 to 2010. It includes the student's name, identification number, department, university, supervisor's name, and date. The project will have 5 chapters: introduction, literature review, research methodology, data presentation and analysis, and conclusion and recommendations. The introduction will provide background on Nigeria's external debt, problem statement, objectives, hypotheses, and significance of the study. The literature review will cover Nigeria's debt history, external debt management, opinions on the topic, debt impact on growth, and limitations of previous studies. The methodology chapter will describe the research approach, models, analytical techniques, and data sources. Sub
The effect of external debt on economic growthSanjida Sarafat
This document provides background information on external debt and its impact on economic growth. It discusses how developing countries often take on external debt to supplement domestic savings and investment. While borrowing can increase output if investments yield returns higher than borrowing costs, high debt levels that countries struggle to service can undermine growth. The document specifically examines Nigeria's large external debt from the 1970s onward, how debt relief initiatives have aimed to address unsustainability, and studies showing links between debt indicators and slowed economic growth. It outlines the objectives, significance and research questions for a study on external debt's effects on Nigeria's economy between 1980-2013.
External debt played both positive and negative roles in Pakistan's economic growth from 2000-2007. Pakistan faced a debt crisis in the late 1990s as external debt increased from $19.2 billion in 1990 to $33.6 billion in 1999. Musharraf's government took steps to reduce this debt burden through policies like the "debt limitation law" and debt was successfully managed after 2001 when Pakistan supported the US war on terror. While debt was reduced, continued management will be needed to encourage sectors like industry and agriculture and meet fiscal gaps.
Domestic debt and the growth of nigerian economyAlexander Decker
Domestic debt in Nigeria has risen significantly between 1994 and 2008, averaging 114.98% of bank deposits which exceeds the recommended threshold of 35% and can crowd out private investment. The study found evidence that high levels of domestic debt negatively impact economic growth. The government should reduce the debt-bank deposit ratio to below 35% and increase tax revenue to finance projects in order to promote private sector growth and development.
This document discusses the relationship between net external liabilities and economic growth in Pakistan from 1973-2012. It finds that net external liabilities, education enrollment, exports, and gross capital formation are positively associated with GDP growth, while the relationship between debt service and growth was insignificant. The document also reviews previous literature on the impact of external debt on economic growth, discusses the variables and data used in the analysis, and presents the results of unit root tests of the time series data.
This study seeks to evaluate the impact of public borrowing on economic growth in Nigeria using time series data from 1980 to 2018. Specifically, the study seeks to analyze the effect of domestic debt (proxy by Federal Government Bonds-FGB) and external debt (proxy by International Monetary Fund Loan-IMFL) on Nigerian’s Gross Domestic Product (GDP). To achieve this objective, secondary data was collected from the Central Bank of Nigeria Statistical bulleting and the Debt Management Office of Nigeria. A multiple regression model involving the dependent variable (GDP) and the independent variables (FGB and IMFL) was formulated and subjected to econometric analysis. These variables were adjusted with the Jarque-bera test of normality while the correlation result was used to check the possibility of multi-collinearity among the variables. The t-test was used to answer the research questions and test the formulated hypotheses at the 5percent statistical level. Results from the analysis show that a positive relationship exists between IMF Loan and Nigeria’s gross domestic product, while a negative relationship exists between FG Bonds and Nigeria’s gross domestic product, which violates the Keynesian theory of public debt. The study concludes that both domestic and external debt significantly affect economic growth in Nigeria. Therefore, it was recommended that public borrowing should be efficiently used and contracted solely for economic reasons and not for social or political reasons as this will help to avoid accumulation of debt stock over time.
The document discusses Nigeria's external debt crisis from the 1980s until receiving debt relief in 2005. It examines the causes of Nigeria's growing external debt, including lack of fiscal discipline, overdependence on oil revenue, and poor project implementation. The debt crisis led to slow economic growth and development in Nigeria as significant resources were diverted to debt servicing instead of social spending. While debt relief reduced Nigeria's debt levels, economic growth and development did not improve as much as desired, suggesting the need for stricter debt management policies to prevent future debt crises.
External debt, economic growth and investment in nigeriaAlexander Decker
This document summarizes a study that examines the impact of external debt on economic growth and investment in Nigeria from 1980 to 2008. The study uses debt-cum-growth and investment models and multiple regression analysis. The results show a positive relationship between external debt, economic growth, and investment, with a high coefficient of determination of about 79.8%. However, private investment, a measure of real development, shows a decline. The study recommends that government ensure borrowed funds are used optimally to avoid economic crises and reduce private investment, which is key to growth.
THE EFFECT OF EXTERNAL DEBT ON ECONOMIC GROWTH OF NIGERIA[1]Chinelo Ezenwa
This document is a title page for a student project on analyzing the effect of external debt on Nigeria's economic growth from 1981 to 2010. It includes the student's name, identification number, department, university, supervisor's name, and date. The project will have 5 chapters: introduction, literature review, research methodology, data presentation and analysis, and conclusion and recommendations. The introduction will provide background on Nigeria's external debt, problem statement, objectives, hypotheses, and significance of the study. The literature review will cover Nigeria's debt history, external debt management, opinions on the topic, debt impact on growth, and limitations of previous studies. The methodology chapter will describe the research approach, models, analytical techniques, and data sources. Sub
The effect of external debt on economic growthSanjida Sarafat
This document provides background information on external debt and its impact on economic growth. It discusses how developing countries often take on external debt to supplement domestic savings and investment. While borrowing can increase output if investments yield returns higher than borrowing costs, high debt levels that countries struggle to service can undermine growth. The document specifically examines Nigeria's large external debt from the 1970s onward, how debt relief initiatives have aimed to address unsustainability, and studies showing links between debt indicators and slowed economic growth. It outlines the objectives, significance and research questions for a study on external debt's effects on Nigeria's economy between 1980-2013.
External debt played both positive and negative roles in Pakistan's economic growth from 2000-2007. Pakistan faced a debt crisis in the late 1990s as external debt increased from $19.2 billion in 1990 to $33.6 billion in 1999. Musharraf's government took steps to reduce this debt burden through policies like the "debt limitation law" and debt was successfully managed after 2001 when Pakistan supported the US war on terror. While debt was reduced, continued management will be needed to encourage sectors like industry and agriculture and meet fiscal gaps.
Domestic debt and the growth of nigerian economyAlexander Decker
Domestic debt in Nigeria has risen significantly between 1994 and 2008, averaging 114.98% of bank deposits which exceeds the recommended threshold of 35% and can crowd out private investment. The study found evidence that high levels of domestic debt negatively impact economic growth. The government should reduce the debt-bank deposit ratio to below 35% and increase tax revenue to finance projects in order to promote private sector growth and development.
This document discusses the relationship between net external liabilities and economic growth in Pakistan from 1973-2012. It finds that net external liabilities, education enrollment, exports, and gross capital formation are positively associated with GDP growth, while the relationship between debt service and growth was insignificant. The document also reviews previous literature on the impact of external debt on economic growth, discusses the variables and data used in the analysis, and presents the results of unit root tests of the time series data.
This study seeks to evaluate the impact of public borrowing on economic growth in Nigeria using time series data from 1980 to 2018. Specifically, the study seeks to analyze the effect of domestic debt (proxy by Federal Government Bonds-FGB) and external debt (proxy by International Monetary Fund Loan-IMFL) on Nigerian’s Gross Domestic Product (GDP). To achieve this objective, secondary data was collected from the Central Bank of Nigeria Statistical bulleting and the Debt Management Office of Nigeria. A multiple regression model involving the dependent variable (GDP) and the independent variables (FGB and IMFL) was formulated and subjected to econometric analysis. These variables were adjusted with the Jarque-bera test of normality while the correlation result was used to check the possibility of multi-collinearity among the variables. The t-test was used to answer the research questions and test the formulated hypotheses at the 5percent statistical level. Results from the analysis show that a positive relationship exists between IMF Loan and Nigeria’s gross domestic product, while a negative relationship exists between FG Bonds and Nigeria’s gross domestic product, which violates the Keynesian theory of public debt. The study concludes that both domestic and external debt significantly affect economic growth in Nigeria. Therefore, it was recommended that public borrowing should be efficiently used and contracted solely for economic reasons and not for social or political reasons as this will help to avoid accumulation of debt stock over time.
Indonesian overseas-debt-relationship-for-economic-development-in-sharia-econ...Anno Tsanjay
1) The document analyzes the relationship between foreign debt and economic development in Indonesia from 2010-2019, as well as perspectives on foreign debt from Islamic economics.
2) It finds that foreign debt in Indonesia has a strong correlation with economic growth and development over the period studied.
3) From an Islamic economics perspective, government foreign debt is permissible if the form and mechanisms of cooperation adhere to Sharia principles and are for the benefit of the people.
This document discusses the problem of debt servicing for developing countries. It provides an overview of what debt is and outlines some of the root causes of debt crises, such as rising indebtedness from the 1970s-1980s due to economic policies. Debt servicing ratios above 15% of yearly export earnings can cause problems. International debt levels for low and middle income countries decreased 18% in 2014. The document also examines debt issues specifically for India, including an unmanageable accumulation of debt and increased foreign borrowing by large corporations.
India's external debt has increased to $485.8 billion as of June 2017. External debt includes commercial borrowings, NRI deposits, and short-term trade credits. The largest components are commercial borrowings at 37.8% and NRI deposits at 24.3%. Debts are denominated in US dollars, Indian rupees, SDRs, Japanese yen, and euros. India has historically relied on loans from the World Bank and IMF to support economic development projects in infrastructure, agriculture, and other sectors.
External debt in India & other emerging economiesTaru Bakshi
This document provides an overview of external debt in India and other emerging economies. It defines external debt and discusses how India classifies its external debt into categories such as multilateral, bilateral, commercial borrowings, and NRI deposits. The document also examines India's external debt indicators, composition, debt service trends, and projections. Additionally, it benchmarks India's external debt metrics against other major developing countries and discusses concepts like sovereign external debt.
India's external debt totals $345.8 billion. External debt as a percentage of GDP is 20%, while the debt service ratio is 6%. India borrows externally to fill gaps between desired expenditures and domestic resources, maintain a presence in international bond markets, and stabilize exchange rates. India's major external creditors are commercial banks, other governments, and international institutions like the IMF and World Bank. Two-thirds of India's external debt is non-government debt. Rising external debt and current account deficits pose risks to India's foreign exchange reserves and creditworthiness.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Public debt is intended to bridge the gap between domestic savings and investment. This paper examines the effect of public debt on economic growth in Bangladesh using autoregressive distributed lag bound testing approach to cointegration. It finds a negative relationship between public debt and economic growth both in the short-run and the long-run. That is, a significant rise in the public debt in Bangladesh appears to be a burden for the economic growth controlling for other determinants of growth. The findings suggest that funds obtained through public debt are not utilized in the productive economic avenues which may improve the growth scenario in Bangladesh. Also, the adverse effect exerted by public debt may further be responsible for a reduction in investment and slower growth of capital stock, which eventually can hamper the labour productivity growth in the country in long run.
External debt can be a source of income for developing countries, but it also poses risks if not sustainable. While external debt and foreign aid can boost economic growth, Pakistan has struggled with debt repayments, which hinders investment and economic development. High external debt servicing reduces funds available for other economic activities and leads to balance of payments issues. Pakistan has accumulated significant external debt due to factors such as unnecessary government spending, inefficient project investments, and low economic growth. Sustainable external debt depends on a country's ability to maintain sufficient exports to service debt obligations.
India’s Resilient External Debt
Summary:
The official documents published by GOI and RBI make incisive analysis of the composition, size, sustainability, trend and overall management of India’s external debt.
As per RBI, the country’s external debt stock which stood at US$ 405 billion as at June-end 2013 has increased to US$ 450.1 billion as at June-end 2014 registering an increase of 11.1 per cent.
According to IMF, debt service -to-export ratio is a key indicator as a measure of repaying capacity of a country. The lower the ratio, the less vulnerable is the economy to external shocks. The debt service ratio of India which peaked 35.3 per cent in 1990-91 in the wake of Balance of Payment crisis declined to 16.6 per cent in 2000-01 and further brought down to a more comfortable level of 5.9 per cent in 2013-14. The import cover of reserves, which stood at 9.5 months at end-March 2011 has declined to 7.0 months at the end-March 2013, still above comfort level. The CAD to GDP ratio deteriorated to 4.7 per cent in 2012-13, mainly on account of slowdown in major trading partners and rise in gold imports. It, however, improved to 1.7 per cent in 2013-14 due to measures taken by policy makers. The rising level of external debt does not necessarily translate into increasing debt burden, as it would also depend on the growth, growth potential of the economy and the export earnings.
I
ndia’s external debt is characterized by resilience and sustainability. The country’s external debt statistics are compiled and disseminated by Government of India (GOI) and Reserve Bank of India (RBI) on a quarterly basis. As per the standard practice, the external debt data for the quarter ending March and June are released by RBI; the data as at September-end and December-end are disseminated by the Ministry of Finance, GOI. Further, Ministry of Finance publishes every year “India’s External Debt-A Status Report” as at March-end. These official documents make incisive analysis of the composition, size, sustainability, trend and overall management of India’s external debt.
As per RBI, the country’s external debt stock which stood at US$ 405 billion as at June-end 2013 has increased to US$ 450.1 billion as at June-end 2014 registering an increase of 11.1 per cent.
The composition of India’s external debt is shown below:
[Amount: US$ billion]
Composition June 2013 June 2014
Multilateral 51.72 53.74
Bilateral 24.82 24.72
Trade Credit 17.53 16.04
Commercial Borrowing 135.81 153.85
NRI Deposits 71.12 106.25
Short-Term ( Trade Credit) 96.76 87.90
International Monetary Fund 5.98 6.15
Rupee Debt 1.25 1.50
(Source: Reserve Bank of India, Press Release, September 30, 2014)
According to RBI’s Annual Report 2013-14, the country’s foreign exchange reserve recorded US$ 316.14 billion vis-à-vis ext
India's external debt increased from $404.9 billion to $426 billion between March and December 2013. This was mainly due to a rise in long-term debt, particularly an increase in NRI deposits under a special swap window. Long-term debt accounted for 78.2% of total external debt. Short-term debt declined slightly. The ratio of short-term debt to foreign exchange reserves fell to 31.5% while the ratio of concessional debt to total debt declined to 10.6%. Key factors contributing to the rise in external debt in recent times include increases in both long-term and short-term debt components.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
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Pakistan has accumulated over $65 billion in total debt, including $35 billion in external debt. Debt servicing consumes nearly half of Pakistan's budget, diverting funds away from critical social services like education, health, and infrastructure. The high debt burden is restricting Pakistan's development and trapping it in a cycle where new loans are taken out just to service old debts. The document proposes several reforms that could help Pakistan escape this debt trap, including increasing tax revenue, improving fiscal management, encouraging investment in water, agriculture and other sectors, and reforming the financial system. Political stability and security are also needed to attract investment and support sustained economic growth.
Bangladesh relies heavily on external assistance to finance development projects and address its balance of payments deficits. While its external debt levels have increased over time, most indicators of debt sustainability remain within thresholds. The ratio of external debt to GDP declined after 2002 to 22.3% in 2010/11 due to strong GDP growth. The ratio of external debt service to exports stabilized below 20% after 1998/99. The ratio of debt to exports declined due to export growth and was below 150% since 2004/05. The ratio of debt to revenue fell below 250% after 2007/08, indicating Bangladesh's ability to service its debt with government revenues. However, declining grants and rising debt service payments remain concerns for long-term debt sustainability without
External debt refers to the amount a country owes to foreign lenders. India borrows externally to fill resource gaps, maintain an international presence, and address issues like crowding out domestic investment. While external debt helped India achieve high growth after 1991 economic reforms, it also leaves the country vulnerable to global financial crises and currency fluctuations. Both unexpected interest rate hikes and rupee depreciation pose major risks. To sustain debt obligations, India must grow fast enough and boost domestic investment. An indefinite cycle of external borrowing could slow economic growth over the long run.
The document discusses the rising levels of public debt in advanced countries and the challenges this poses. It notes that debt levels above 100% of GDP were common after WWII but issues are more serious now due to aging populations. Modeling of debt projections for 30 years out shows debt could rise to 3 times current levels without policy changes to address aging populations and the associated rise in spending. Higher debt levels increase risks of unstable dynamics and lower long term growth. Action is needed now to address long term fiscal imbalances.
1. China has experienced a dramatic economic rise fueled by cheap labor, investment, and exports, but this growth has been built on unsustainable levels of debt and a fragile financial system.
2. China is at high risk of a financial crisis in the next few years as liquidity growth slows and debt levels surpass 225% of GDP, with corporate and shadow banking debt posing significant risks.
3. While China can take steps like developing its bond market, increasing consumption and reducing unproductive investment will be difficult due to political opposition, so a crisis may be needed to force meaningful reforms.
This document summarizes the structure and profile of Philippine public debt from 1990 to 2009. It discusses the sources, categories, and maturity of domestic and foreign public debt. Domestic debt is dominated by treasury bills and bonds, with maturities lengthening over time. Foreign debt is primarily from commercial and multilateral creditors, denominated in US dollars and Japanese yen, and remains largely long-term. Both domestic and foreign debt levels increased substantially over this period relative to GDP.
Impact of IMF loan on Pakistan's economy: In long run and short runAyesha Majid
To keep the balance of payments in check and to meet the financial obligations government of Pakistan has signed 13th bailout with IMF. This bailout has laid several conditions on the Pakistani government including those on taxes and subsidies, government spending, interest rate, foreign exchange rate and Pakistan's borrowing from China.
Whether the program turns to be beneficial or detrimental for the economy depends how the public responds to the measures and how thoughtfully the government implements it.
Economic Development Implications of the International Financial Institutions...AJHSSR Journal
ABSTRACT : Employment generation has remained central to the policy goal of economic development in
Nigeria. In view of this, an empirical investigation into the link between international financial institutions loans
and employment rate was carried out in this study. Specifically, the effects of loans from the International
Finance Corporation (IFC), International Development Association (IDA), Paris Club and African Development
Bank on employment rate were examined. The data for the variables were obtained from the United Nations
Development Programme Human Development Report, National Bureau of Statistics, World Development
Indicators and International Debt Statistics. The empirical investigation followed an ex post facto research
design with the application of descriptive statistics, unit root and cointegration tests as well as error correction
model and Granger causality tests as the data analysis techniques. The unit root test results revealed that all the
variables are stationary at first difference, which justifies the test for cointegration using the Johansen method. It
was found from the cointegration test results that long run relationship exists among the variables in the model.
The parsimonious ECM revealed that IDA and African Development Bank loans have a significant positive
effect on employment rate. This highlights the substantial role played these funding sources in generating
employment in Nigeria. On the contrary, International Finance Corporation and Paris Club do not have any
significant effect on employment rate. Owing to the findings, it is recommended that loans available to Nigeria
from the international development association should be channeled to investments in critical infrastructure and
agriculture development to generate employment and achieve economic development.
KEYWORDS: Employment generation, institutions loans, International Finance Corporation, IDA, Paris Club
and African Development Bank
Net External Liabilities and Economic Growth: A Case Study of pakistansanaullah noonari
This document discusses the relationship between net external liabilities and economic growth in Pakistan from 1973-2012. It finds that net external liabilities, education enrollment, exports, and gross capital formation are positively associated with GDP growth, while the relationship between debt service and growth was insignificant. The document also reviews previous literature on the impact of external debt on economic growth, discusses the variables and data used in the analysis, and presents the results of unit root tests of the time series data.
Indonesian overseas-debt-relationship-for-economic-development-in-sharia-econ...Anno Tsanjay
1) The document analyzes the relationship between foreign debt and economic development in Indonesia from 2010-2019, as well as perspectives on foreign debt from Islamic economics.
2) It finds that foreign debt in Indonesia has a strong correlation with economic growth and development over the period studied.
3) From an Islamic economics perspective, government foreign debt is permissible if the form and mechanisms of cooperation adhere to Sharia principles and are for the benefit of the people.
This document discusses the problem of debt servicing for developing countries. It provides an overview of what debt is and outlines some of the root causes of debt crises, such as rising indebtedness from the 1970s-1980s due to economic policies. Debt servicing ratios above 15% of yearly export earnings can cause problems. International debt levels for low and middle income countries decreased 18% in 2014. The document also examines debt issues specifically for India, including an unmanageable accumulation of debt and increased foreign borrowing by large corporations.
India's external debt has increased to $485.8 billion as of June 2017. External debt includes commercial borrowings, NRI deposits, and short-term trade credits. The largest components are commercial borrowings at 37.8% and NRI deposits at 24.3%. Debts are denominated in US dollars, Indian rupees, SDRs, Japanese yen, and euros. India has historically relied on loans from the World Bank and IMF to support economic development projects in infrastructure, agriculture, and other sectors.
External debt in India & other emerging economiesTaru Bakshi
This document provides an overview of external debt in India and other emerging economies. It defines external debt and discusses how India classifies its external debt into categories such as multilateral, bilateral, commercial borrowings, and NRI deposits. The document also examines India's external debt indicators, composition, debt service trends, and projections. Additionally, it benchmarks India's external debt metrics against other major developing countries and discusses concepts like sovereign external debt.
India's external debt totals $345.8 billion. External debt as a percentage of GDP is 20%, while the debt service ratio is 6%. India borrows externally to fill gaps between desired expenditures and domestic resources, maintain a presence in international bond markets, and stabilize exchange rates. India's major external creditors are commercial banks, other governments, and international institutions like the IMF and World Bank. Two-thirds of India's external debt is non-government debt. Rising external debt and current account deficits pose risks to India's foreign exchange reserves and creditworthiness.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Public debt is intended to bridge the gap between domestic savings and investment. This paper examines the effect of public debt on economic growth in Bangladesh using autoregressive distributed lag bound testing approach to cointegration. It finds a negative relationship between public debt and economic growth both in the short-run and the long-run. That is, a significant rise in the public debt in Bangladesh appears to be a burden for the economic growth controlling for other determinants of growth. The findings suggest that funds obtained through public debt are not utilized in the productive economic avenues which may improve the growth scenario in Bangladesh. Also, the adverse effect exerted by public debt may further be responsible for a reduction in investment and slower growth of capital stock, which eventually can hamper the labour productivity growth in the country in long run.
External debt can be a source of income for developing countries, but it also poses risks if not sustainable. While external debt and foreign aid can boost economic growth, Pakistan has struggled with debt repayments, which hinders investment and economic development. High external debt servicing reduces funds available for other economic activities and leads to balance of payments issues. Pakistan has accumulated significant external debt due to factors such as unnecessary government spending, inefficient project investments, and low economic growth. Sustainable external debt depends on a country's ability to maintain sufficient exports to service debt obligations.
India’s Resilient External Debt
Summary:
The official documents published by GOI and RBI make incisive analysis of the composition, size, sustainability, trend and overall management of India’s external debt.
As per RBI, the country’s external debt stock which stood at US$ 405 billion as at June-end 2013 has increased to US$ 450.1 billion as at June-end 2014 registering an increase of 11.1 per cent.
According to IMF, debt service -to-export ratio is a key indicator as a measure of repaying capacity of a country. The lower the ratio, the less vulnerable is the economy to external shocks. The debt service ratio of India which peaked 35.3 per cent in 1990-91 in the wake of Balance of Payment crisis declined to 16.6 per cent in 2000-01 and further brought down to a more comfortable level of 5.9 per cent in 2013-14. The import cover of reserves, which stood at 9.5 months at end-March 2011 has declined to 7.0 months at the end-March 2013, still above comfort level. The CAD to GDP ratio deteriorated to 4.7 per cent in 2012-13, mainly on account of slowdown in major trading partners and rise in gold imports. It, however, improved to 1.7 per cent in 2013-14 due to measures taken by policy makers. The rising level of external debt does not necessarily translate into increasing debt burden, as it would also depend on the growth, growth potential of the economy and the export earnings.
I
ndia’s external debt is characterized by resilience and sustainability. The country’s external debt statistics are compiled and disseminated by Government of India (GOI) and Reserve Bank of India (RBI) on a quarterly basis. As per the standard practice, the external debt data for the quarter ending March and June are released by RBI; the data as at September-end and December-end are disseminated by the Ministry of Finance, GOI. Further, Ministry of Finance publishes every year “India’s External Debt-A Status Report” as at March-end. These official documents make incisive analysis of the composition, size, sustainability, trend and overall management of India’s external debt.
As per RBI, the country’s external debt stock which stood at US$ 405 billion as at June-end 2013 has increased to US$ 450.1 billion as at June-end 2014 registering an increase of 11.1 per cent.
The composition of India’s external debt is shown below:
[Amount: US$ billion]
Composition June 2013 June 2014
Multilateral 51.72 53.74
Bilateral 24.82 24.72
Trade Credit 17.53 16.04
Commercial Borrowing 135.81 153.85
NRI Deposits 71.12 106.25
Short-Term ( Trade Credit) 96.76 87.90
International Monetary Fund 5.98 6.15
Rupee Debt 1.25 1.50
(Source: Reserve Bank of India, Press Release, September 30, 2014)
According to RBI’s Annual Report 2013-14, the country’s foreign exchange reserve recorded US$ 316.14 billion vis-à-vis ext
India's external debt increased from $404.9 billion to $426 billion between March and December 2013. This was mainly due to a rise in long-term debt, particularly an increase in NRI deposits under a special swap window. Long-term debt accounted for 78.2% of total external debt. Short-term debt declined slightly. The ratio of short-term debt to foreign exchange reserves fell to 31.5% while the ratio of concessional debt to total debt declined to 10.6%. Key factors contributing to the rise in external debt in recent times include increases in both long-term and short-term debt components.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
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Pakistan has accumulated over $65 billion in total debt, including $35 billion in external debt. Debt servicing consumes nearly half of Pakistan's budget, diverting funds away from critical social services like education, health, and infrastructure. The high debt burden is restricting Pakistan's development and trapping it in a cycle where new loans are taken out just to service old debts. The document proposes several reforms that could help Pakistan escape this debt trap, including increasing tax revenue, improving fiscal management, encouraging investment in water, agriculture and other sectors, and reforming the financial system. Political stability and security are also needed to attract investment and support sustained economic growth.
Bangladesh relies heavily on external assistance to finance development projects and address its balance of payments deficits. While its external debt levels have increased over time, most indicators of debt sustainability remain within thresholds. The ratio of external debt to GDP declined after 2002 to 22.3% in 2010/11 due to strong GDP growth. The ratio of external debt service to exports stabilized below 20% after 1998/99. The ratio of debt to exports declined due to export growth and was below 150% since 2004/05. The ratio of debt to revenue fell below 250% after 2007/08, indicating Bangladesh's ability to service its debt with government revenues. However, declining grants and rising debt service payments remain concerns for long-term debt sustainability without
External debt refers to the amount a country owes to foreign lenders. India borrows externally to fill resource gaps, maintain an international presence, and address issues like crowding out domestic investment. While external debt helped India achieve high growth after 1991 economic reforms, it also leaves the country vulnerable to global financial crises and currency fluctuations. Both unexpected interest rate hikes and rupee depreciation pose major risks. To sustain debt obligations, India must grow fast enough and boost domestic investment. An indefinite cycle of external borrowing could slow economic growth over the long run.
The document discusses the rising levels of public debt in advanced countries and the challenges this poses. It notes that debt levels above 100% of GDP were common after WWII but issues are more serious now due to aging populations. Modeling of debt projections for 30 years out shows debt could rise to 3 times current levels without policy changes to address aging populations and the associated rise in spending. Higher debt levels increase risks of unstable dynamics and lower long term growth. Action is needed now to address long term fiscal imbalances.
1. China has experienced a dramatic economic rise fueled by cheap labor, investment, and exports, but this growth has been built on unsustainable levels of debt and a fragile financial system.
2. China is at high risk of a financial crisis in the next few years as liquidity growth slows and debt levels surpass 225% of GDP, with corporate and shadow banking debt posing significant risks.
3. While China can take steps like developing its bond market, increasing consumption and reducing unproductive investment will be difficult due to political opposition, so a crisis may be needed to force meaningful reforms.
This document summarizes the structure and profile of Philippine public debt from 1990 to 2009. It discusses the sources, categories, and maturity of domestic and foreign public debt. Domestic debt is dominated by treasury bills and bonds, with maturities lengthening over time. Foreign debt is primarily from commercial and multilateral creditors, denominated in US dollars and Japanese yen, and remains largely long-term. Both domestic and foreign debt levels increased substantially over this period relative to GDP.
Impact of IMF loan on Pakistan's economy: In long run and short runAyesha Majid
To keep the balance of payments in check and to meet the financial obligations government of Pakistan has signed 13th bailout with IMF. This bailout has laid several conditions on the Pakistani government including those on taxes and subsidies, government spending, interest rate, foreign exchange rate and Pakistan's borrowing from China.
Whether the program turns to be beneficial or detrimental for the economy depends how the public responds to the measures and how thoughtfully the government implements it.
Economic Development Implications of the International Financial Institutions...AJHSSR Journal
ABSTRACT : Employment generation has remained central to the policy goal of economic development in
Nigeria. In view of this, an empirical investigation into the link between international financial institutions loans
and employment rate was carried out in this study. Specifically, the effects of loans from the International
Finance Corporation (IFC), International Development Association (IDA), Paris Club and African Development
Bank on employment rate were examined. The data for the variables were obtained from the United Nations
Development Programme Human Development Report, National Bureau of Statistics, World Development
Indicators and International Debt Statistics. The empirical investigation followed an ex post facto research
design with the application of descriptive statistics, unit root and cointegration tests as well as error correction
model and Granger causality tests as the data analysis techniques. The unit root test results revealed that all the
variables are stationary at first difference, which justifies the test for cointegration using the Johansen method. It
was found from the cointegration test results that long run relationship exists among the variables in the model.
The parsimonious ECM revealed that IDA and African Development Bank loans have a significant positive
effect on employment rate. This highlights the substantial role played these funding sources in generating
employment in Nigeria. On the contrary, International Finance Corporation and Paris Club do not have any
significant effect on employment rate. Owing to the findings, it is recommended that loans available to Nigeria
from the international development association should be channeled to investments in critical infrastructure and
agriculture development to generate employment and achieve economic development.
KEYWORDS: Employment generation, institutions loans, International Finance Corporation, IDA, Paris Club
and African Development Bank
Net External Liabilities and Economic Growth: A Case Study of pakistansanaullah noonari
This document discusses the relationship between net external liabilities and economic growth in Pakistan from 1973-2012. It finds that net external liabilities, education enrollment, exports, and gross capital formation are positively associated with GDP growth, while the relationship between debt service and growth was insignificant. The document also reviews previous literature on the impact of external debt on economic growth, discusses the variables and data used in the analysis, and presents the results of unit root tests of the time series data.
External debt and economic growth case of jordan (1990 2011)Alexander Decker
This document summarizes a study examining the relationship between external debt and economic growth in Jordan from 1990-2011. The study finds a positive relationship between external debt and economic growth, indicating that external debt has contributed to Jordan's economic development. However, debt servicing is found to have a negative relationship with economic growth, suggesting it hampers growth. The document provides background on Jordan's economic growth rates and trends in external debt levels over the period studied.
4.[30 39]long run relationship between private investment and monetary policy...Alexander Decker
This document summarizes a research journal article that investigates the long-run relationship between private investment and monetary policy in Nigeria from 1980-2009. It uses vector auto-regression techniques to test the relationship between private investment, GDP, money supply, and other factors. The results showed that money supply has a negative short-run impact on private investment, while GDP and other factors have a positive impact. In the long-run, all the variables became statistically significant. This implies that monetary policy in Nigeria has positively affected the growth of private investment and the economy over the long term. The document reviews several other studies on the relationship between financial development, private investment, and economic growth.
4.[30 39]long run relationship between private investment and monetary policy...Alexander Decker
This study investigated the long-run relationship between private investment and monetary policy in Nigeria from 1981 to 2009. The results of the vector autoregression model showed that in the short-run, money supply had a negative but insignificant impact on private investment, while GDP and other factors had a positive impact. However, in the long-run all variables became statistically significant, with money supply positively affecting private investment growth. This implies that monetary policy in Nigeria has positively influenced the growth of private investment over the long-run. The study concluded that private investment and monetary policy have been negatively related in the short-run in terms of money supply, but positively related based on GDP and other factors in the long-run.
11.long run relationship between private investment and monetary policy in ni...Alexander Decker
This study investigated the long-run relationship between private investment and monetary policy in Nigeria from 1981 to 2009. The results of the vector autoregression model showed that in the short-run, money supply had a negative but insignificant impact on private investment, while GDP and other factors had a positive impact. However, in the long-run all variables became statistically significant, with money supply positively affecting private investment growth. This implies that monetary policy in Nigeria has positively influenced the growth of private investment over the long-run. The study concluded that private investment and monetary policy have been negatively related in the short-run in terms of money supply, but positively related based on GDP and other factors in the long-run.
11.long run relationship between private investment and monetary policy in ni...Alexander Decker
This study investigated the long-run relationship between private investment and monetary policy in Nigeria from 1981 to 2009. The results of the vector autoregression model showed that in the short-run, money supply had a negative but insignificant impact on private investment, while GDP and other factors had a positive impact. However, in the long-run all variables became statistically significant, with money supply positively affecting private investment growth. This implies that monetary policy in Nigeria has positively influenced the growth of private investment over the long-run. The study concluded that private investment and monetary policy have been negatively related in the short-run in terms of money supply, but positively related based on GDP and other factors in the long-run.
Developmental Effect of the Rising Debt Level in Nigeriaijtsrd
Background Nigerian economy is bedeviled by dwindling economy, low per capita income, poor infrastructural development, high unemployment rates, inadequate basic amenities, falling growth rates of GDP and recently, rated the poverty headquarters of the world which calls for empirical investigation as a way forward to resuscitate the economy.Aim The study investigated the effect of debt level on the economic development of Nigeria from 1999 to 2021. Materials and Methods Two research questions were developed to guide the study. Also, two hypotheses were formulated for the study. Ex post facto research design was adopted. The study used time series data to analyse public debt level trends in Nigeria compared to GDP growth rate over twenty three 23 years, spanning from the year 1999 to 2021. Ordinary least square regression, unit root test, and Johansen co integration test were used to analyse the data collected from Central Bank of Nigeria Statistical Bulletin. Results The results of the study showed that domestic debt level significantly and positively affects the gross domestic product performance in Nigeria. Also, the study found that external debt level significantly and negatively influences the gross domestic product of Nigeria. Conclusion The study concludes that debt level domestic and external have significant effect on Nigerian gross domestic product.Recommendation It was recommended that the government should resort to domestic debts up to sustainable debt levels that do not crowd out development and social programmes to prevent issues with debt overhang, government borrowing from international markets should be utilized effectively and concessionary loans rather than commercial loans should be sought after. Tochukwu Akaegbobi | Okeke Onyekachi, N | Onyeogubalu Ogochukwu, N "Developmental Effect of the Rising Debt Level in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-3 , June 2023, URL: https://www.ijtsrd.com.com/papers/ijtsrd57480.pdf Paper URL: https://www.ijtsrd.com.com/management/accounting-and-finance/57480/developmental-effect-of-the-rising-debt-level-in-nigeria/tochukwu-akaegbobi
DOES PUBLIC BORROWINGS CROWD OUT PRIVATE SECTOR CREDIT? EVIDENCE FROM NIGERIAAJHSSR Journal
ABSTRACT: The performance of the private sector in Nigeria has been declining,due to constrained financial
resources. Thisstudyemployed Autoregressive Distributed Lag Model (bounds) test to investigate the impact of
government borrowing on the availability of credit to the private sector in Nigeria, using quarterly data from the
period2000 to 2021.The findings from the study revealed that government borrowings crowds out private sector
credit in Nigeria.Therefore,the study recommended that, since the private sector is regarded as the engine of
growth in any economy, the government should uphold a fiscal policy framework and debt policy that will
continuously support the growth of the private sector in Nigeria. Government borrowings should be on need-basis
andshould embark on more capital projects that would create employment opportunities for the growing labour
force. This, in the short and long run would lead to increased economic growth.
KEYWORDS: Government, private sector, borrowings, fiscal deficit, expenditure, revenue,credit,economy, and
growth.
A causality analysis of financial deepening and performance ofAlexander Decker
This study examines the causal relationship between financial deepening and economic performance in Nigeria from 1990-2013. Secondary data on gross domestic product (GDP), broad money supply (M2), market capitalization (MAC), and credit to the private sector (CPS) was collected from the Central Bank of Nigeria and National Bureau of Statistics. Unit root tests confirmed the variables were integrated of order one, or stationary after first differencing. The study aims to test for a long-run relationship between financial deepening and economic performance in Nigeria and investigate the direction of causality between the variables. The results will help inform government policies around manipulating the money supply and improving access to credit to facilitate economic growth and development.
A causality analysis of financial deepening and performance ofAlexander Decker
This study examines the causal relationship between financial deepening and economic performance in Nigeria from 1990-2013. Secondary data on gross domestic product (GDP), broad money supply (M2), market capitalization (MAC), and credit to the private sector (CPS) was collected from the Central Bank of Nigeria and National Bureau of Statistics. Unit root tests confirmed the variables were integrated of order one, or stationary after first differencing. The study aims to test for a long-run relationship between financial deepening and economic performance in Nigeria and investigate the direction of causality between the variables. The results will help inform government policies around manipulating the money supply and improving access to credit to facilitate economic growth and development.
Impact of macroeconomic variables on government budget deficit in nigeriaAlexander Decker
This document examines the relationship between macroeconomic variables and government budget deficits in Nigeria from 1981 to 2010. It finds that real GDP, inflation, exchange rate, interest rate, government budget deficit, and gross investment are cointegrated, indicating a long-run relationship. However, there is no statistical significance between budget deficits and economic growth in Nigeria. The paper recommends improving economic and political institutions to enhance policymaking, fully implementing fiscal responsibility acts to reduce leakage, and decreasing corruption to achieve fiscal responsibility.
This study examined the effect interest rate on economic growth in Nigeria. Augmented Dickey – Fuller (ADF), Bound Test and Autoregressive Distributed Lag (ARDL) were employed to examine the effect of impact of interest rate on economic growth in Nigeria. The unit root test showed gross domestic product was 1(0) while interest rate, investment and gross capital formation were 1(1). The result of the Bound Test indicated long run relationship among the macroeconomic variables employed in the study. The result of the ARDL indicated that interest rate had negative effect on economic growth both in short run and long run. However, in the long run investment and gross capital formation were established to have positive effect on economic growth with gross capital formation being insignificant. It was concluded that interest rate has a macroeconomic tool is not effective in stimulating economic growth in Nigeria. It was recommended that the level of interest rate should be adequately controlled for the purpose of stimulating economic growth without inflationary pressure. Finally, robust macroeconomic policies aimed at ensuring economic stability should be formulated in order to increase capital formation and attract investment in order to promote economic growth.
Analysis of the effects of capital flight on economic growth evidence from ni...Alexander Decker
This document analyzes the effects of capital flight on economic growth in Nigeria from 1980 to 2011. It finds that large capital outflows from Nigeria are due to political instability, high fiscal deficits, high interest rates, and high external debt servicing costs. It recommends policies to alleviate capital flight such as good governance, fiscal discipline, and enacting laws to encourage repatriation of illegally moved funds for investment in Nigeria's real economy.
The impact of interest rates on the development of an emerging market empiric...Alexander Decker
This document summarizes a journal article about the impact of interest rates on the development of emerging markets, using Nigeria as an empirical case study. It acknowledges people who assisted with the research. The abstract indicates that interest rates are difficult to forecast and impact borrowing costs for businesses. While higher rates could encourage savings in the long-run, current high rates in Nigeria of 12% are negatively impacting growth. The literature review discusses how inflation can stimulate or deter human capital formation and how interest rates influence savings, investment, and financial intermediation. It recommends Nigeria adopt pragmatic policies to reduce lending rates to single digits to boost the economy.
Banking sector developments in emerging markets a review of recent developmen...Alexander Decker
This document summarizes recent developments in the banking sector across Africa. It finds that financial deepening, as measured by indicators like private credit to GDP, has increased across the continent from 1999-2010, with the highest growth in North Africa. Banking sectors in North African countries like Egypt, Algeria, and Tunisia are dominated by large state-owned banks, while Morocco has a more private bank-dominated system. East and Central Africa generally lag behind other regions in terms of financial deepening indicators. The document provides statistics and analysis on banking sector trends in various African countries and regions.
Financial development and economic growth in nigeriaAlexander Decker
The document discusses the relationship between financial development and economic growth in Nigeria. It analyzes previous literature on the topic which shows mixed findings on the direction of the relationship. The study aims to contribute new evidence on how financial development impacts economic growth in Nigeria using time series data and econometric modeling. Preliminary results suggest a long-run relationship between financial development indicators like bank credit and economic growth as measured by GDP. However, some variables like lending rates did not have the expected effect. The paper concludes with recommendations for policies to strengthen this relationship and foster growth.
The nexus between budget deficit and inflation in the nigerianAlexander Decker
This research paper examines the relationship between budget deficits and inflation in Nigeria from 1980 to 2009. It uses time series data and the vector error correction mechanism to analyze the correlation between the two macroeconomic variables. The results show there is a significant causal relationship from budget deficits to inflation, but not from inflation to budget deficits, indicating a unidirectional causality. This means budget deficits directly and indirectly affect inflation through increases in the money supply in the Nigerian economy. The paper recommends adequate monetary policy to balance the role of money supply in influencing both budget deficits and inflation, given the unidirectional relationship found between the two variables.
Relative Potency of Internal and External Sources of Financing Nigerian Econo...iosrjce
The study is aimed at determining the relative potency of internal and external sources of financing
economic growth in Nigeria using time series data from 1983 to 2012. Ordinary least square regression method,
unit root test, Johansen cointegration test and error correction model were used for the purpose of analyses.
Gross national saving, internal debt, grants and foreign investment are stationary at level, gross domestic
investment at first difference and gross domestic product at second difference. From the over parameterized
ECM, none of the internal and external financing options is significant in explaining economic growth. In the
group of internal options, gross national saving, gross domestic investment and internal debt contribute
positively to growth in the short and long run, the only exception being gross national saving in the short run. In
the group of external options however, only grant contribute positively to growth in the long and short run.
Foreign direct investment appears like a wolf in sheep’s clothing given its long run negative impact. Finally,
growth is a decreasing and an increasing function of external debt in the short and long run respectively. It is
noteworthy that a very high constant coefficient implies that there are many factors that actually determine
Nigerian gross domestic product outside the model. While the variables of interest are theoretically expected to
play significant roles, they fail empirically. A comparison of the two modes shows that internal factors prove to
be more reliable in accelerating Nigerian economic growth.
Abnormalities of hormones and inflammatory cytokines in women affected with p...Alexander Decker
Women with polycystic ovary syndrome (PCOS) have elevated levels of hormones like luteinizing hormone and testosterone, as well as higher levels of insulin and insulin resistance compared to healthy women. They also have increased levels of inflammatory markers like C-reactive protein, interleukin-6, and leptin. This study found these abnormalities in the hormones and inflammatory cytokines of women with PCOS ages 23-40, indicating that hormone imbalances associated with insulin resistance and elevated inflammatory markers may worsen infertility in women with PCOS.
A usability evaluation framework for b2 c e commerce websitesAlexander Decker
This document presents a framework for evaluating the usability of B2C e-commerce websites. It involves user testing methods like usability testing and interviews to identify usability problems in areas like navigation, design, purchasing processes, and customer service. The framework specifies goals for the evaluation, determines which website aspects to evaluate, and identifies target users. It then describes collecting data through user testing and analyzing the results to identify usability problems and suggest improvements.
A universal model for managing the marketing executives in nigerian banksAlexander Decker
This document discusses a study that aimed to synthesize motivation theories into a universal model for managing marketing executives in Nigerian banks. The study was guided by Maslow and McGregor's theories. A sample of 303 marketing executives was used. The results showed that managers will be most effective at motivating marketing executives if they consider individual needs and create challenging but attainable goals. The emerged model suggests managers should provide job satisfaction by tailoring assignments to abilities and monitoring performance with feedback. This addresses confusion faced by Nigerian bank managers in determining effective motivation strategies.
A unique common fixed point theorems in generalized dAlexander Decker
This document presents definitions and properties related to generalized D*-metric spaces and establishes some common fixed point theorems for contractive type mappings in these spaces. It begins by introducing D*-metric spaces and generalized D*-metric spaces, defines concepts like convergence and Cauchy sequences. It presents lemmas showing the uniqueness of limits in these spaces and the equivalence of different definitions of convergence. The goal of the paper is then stated as obtaining a unique common fixed point theorem for generalized D*-metric spaces.
A trends of salmonella and antibiotic resistanceAlexander Decker
This document provides a review of trends in Salmonella and antibiotic resistance. It begins with an introduction to Salmonella as a facultative anaerobe that causes nontyphoidal salmonellosis. The emergence of antimicrobial-resistant Salmonella is then discussed. The document proceeds to cover the historical perspective and classification of Salmonella, definitions of antimicrobials and antibiotic resistance, and mechanisms of antibiotic resistance in Salmonella including modification or destruction of antimicrobial agents, efflux pumps, modification of antibiotic targets, and decreased membrane permeability. Specific resistance mechanisms are discussed for several classes of antimicrobials.
A transformational generative approach towards understanding al-istifhamAlexander Decker
This document discusses a transformational-generative approach to understanding Al-Istifham, which refers to interrogative sentences in Arabic. It begins with an introduction to the origin and development of Arabic grammar. The paper then explains the theoretical framework of transformational-generative grammar that is used. Basic linguistic concepts and terms related to Arabic grammar are defined. The document analyzes how interrogative sentences in Arabic can be derived and transformed via tools from transformational-generative grammar, categorizing Al-Istifham into linguistic and literary questions.
A time series analysis of the determinants of savings in namibiaAlexander Decker
This document summarizes a study on the determinants of savings in Namibia from 1991 to 2012. It reviews previous literature on savings determinants in developing countries. The study uses time series analysis including unit root tests, cointegration, and error correction models to analyze the relationship between savings and variables like income, inflation, population growth, deposit rates, and financial deepening in Namibia. The results found inflation and income have a positive impact on savings, while population growth negatively impacts savings. Deposit rates and financial deepening were found to have no significant impact. The study reinforces previous work and emphasizes the importance of improving income levels to achieve higher savings rates in Namibia.
A therapy for physical and mental fitness of school childrenAlexander Decker
This document summarizes a study on the importance of exercise in maintaining physical and mental fitness for school children. It discusses how physical and mental fitness are developed through participation in regular physical exercises and cannot be achieved solely through classroom learning. The document outlines different types and components of fitness and argues that developing fitness should be a key objective of education systems. It recommends that schools ensure pupils engage in graded physical activities and exercises to support their overall development.
A theory of efficiency for managing the marketing executives in nigerian banksAlexander Decker
This document summarizes a study examining efficiency in managing marketing executives in Nigerian banks. The study was examined through the lenses of Kaizen theory (continuous improvement) and efficiency theory. A survey of 303 marketing executives from Nigerian banks found that management plays a key role in identifying and implementing efficiency improvements. The document recommends adopting a "3H grand strategy" to improve the heads, hearts, and hands of management and marketing executives by enhancing their knowledge, attitudes, and tools.
This document discusses evaluating the link budget for effective 900MHz GSM communication. It describes the basic parameters needed for a high-level link budget calculation, including transmitter power, antenna gains, path loss, and propagation models. Common propagation models for 900MHz that are described include Okumura model for urban areas and Hata model for urban, suburban, and open areas. Rain attenuation is also incorporated using the updated ITU model to improve communication during rainfall.
A synthetic review of contraceptive supplies in punjabAlexander Decker
This document discusses contraceptive use in Punjab, Pakistan. It begins by providing background on the benefits of family planning and contraceptive use for maternal and child health. It then analyzes contraceptive commodity data from Punjab, finding that use is still low despite efforts to improve access. The document concludes by emphasizing the need for strategies to bridge gaps and meet the unmet need for effective and affordable contraceptive methods and supplies in Punjab in order to improve health outcomes.
A synthesis of taylor’s and fayol’s management approaches for managing market...Alexander Decker
1) The document discusses synthesizing Taylor's scientific management approach and Fayol's process management approach to identify an effective way to manage marketing executives in Nigerian banks.
2) It reviews Taylor's emphasis on efficiency and breaking tasks into small parts, and Fayol's focus on developing general management principles.
3) The study administered a survey to 303 marketing executives in Nigerian banks to test if combining elements of Taylor and Fayol's approaches would help manage their performance through clear roles, accountability, and motivation. Statistical analysis supported combining the two approaches.
A survey paper on sequence pattern mining with incrementalAlexander Decker
This document summarizes four algorithms for sequential pattern mining: GSP, ISM, FreeSpan, and PrefixSpan. GSP is an Apriori-based algorithm that incorporates time constraints. ISM extends SPADE to incrementally update patterns after database changes. FreeSpan uses frequent items to recursively project databases and grow subsequences. PrefixSpan also uses projection but claims to not require candidate generation. It recursively projects databases based on short prefix patterns. The document concludes by stating the goal was to find an efficient scheme for extracting sequential patterns from transactional datasets.
A survey on live virtual machine migrations and its techniquesAlexander Decker
This document summarizes several techniques for live virtual machine migration in cloud computing. It discusses works that have proposed affinity-aware migration models to improve resource utilization, energy efficient migration approaches using storage migration and live VM migration, and a dynamic consolidation technique using migration control to avoid unnecessary migrations. The document also summarizes works that have designed methods to minimize migration downtime and network traffic, proposed a resource reservation framework for efficient migration of multiple VMs, and addressed real-time issues in live migration. Finally, it provides a table summarizing the techniques, tools used, and potential future work or gaps identified for each discussed work.
A survey on data mining and analysis in hadoop and mongo dbAlexander Decker
This document discusses data mining of big data using Hadoop and MongoDB. It provides an overview of Hadoop and MongoDB and their uses in big data analysis. Specifically, it proposes using Hadoop for distributed processing and MongoDB for data storage and input. The document reviews several related works that discuss big data analysis using these tools, as well as their capabilities for scalable data storage and mining. It aims to improve computational time and fault tolerance for big data analysis by mining data stored in Hadoop using MongoDB and MapReduce.
1. The document discusses several challenges for integrating media with cloud computing including media content convergence, scalability and expandability, finding appropriate applications, and reliability.
2. Media content convergence challenges include dealing with the heterogeneity of media types, services, networks, devices, and quality of service requirements as well as integrating technologies used by media providers and consumers.
3. Scalability and expandability challenges involve adapting to the increasing volume of media content and being able to support new media formats and outlets over time.
This document surveys trust architectures that leverage provenance in wireless sensor networks. It begins with background on provenance, which refers to the documented history or derivation of data. Provenance can be used to assess trust by providing metadata about how data was processed. The document then discusses challenges for using provenance to establish trust in wireless sensor networks, which have constraints on energy and computation. Finally, it provides background on trust, which is the subjective probability that a node will behave dependably. Trust architectures need to be lightweight to account for the constraints of wireless sensor networks.
This document discusses private equity investments in Kenya. It provides background on private equity and discusses trends in various regions. The objectives of the study discussed are to establish the extent of private equity adoption in Kenya, identify common forms of private equity utilized, and determine typical exit strategies. Private equity can involve venture capital, leveraged buyouts, or mezzanine financing. Exits allow recycling of capital into new opportunities. The document provides context on private equity globally and in developing markets like Africa to frame the goals of the study.
This document discusses a study that analyzes the financial health of the Indian logistics industry from 2005-2012 using Altman's Z-score model. The study finds that the average Z-score for selected logistics firms was in the healthy to very healthy range during the study period. The average Z-score increased from 2006 to 2010 when the Indian economy was hit by the global recession, indicating the overall performance of the Indian logistics industry was good. The document reviews previous literature on measuring financial performance and distress using ratios and Z-scores, and outlines the objectives and methodology used in the current study.
13 Jun 24 ILC Retirement Income Summit - slides.pptxILC- UK
ILC's Retirement Income Summit was hosted by M&G and supported by Canada Life. The event brought together key policymakers, influencers and experts to help identify policy priorities for the next Government and ensure more of us have access to a decent income in retirement.
Contributors included:
Jo Blanden, Professor in Economics, University of Surrey
Clive Bolton, CEO, Life Insurance M&G Plc
Jim Boyd, CEO, Equity Release Council
Molly Broome, Economist, Resolution Foundation
Nida Broughton, Co-Director of Economic Policy, Behavioural Insights Team
Jonathan Cribb, Associate Director and Head of Retirement, Savings, and Ageing, Institute for Fiscal Studies
Joanna Elson CBE, Chief Executive Officer, Independent Age
Tom Evans, Managing Director of Retirement, Canada Life
Steve Groves, Chair, Key Retirement Group
Tish Hanifan, Founder and Joint Chair of the Society of Later life Advisers
Sue Lewis, ILC Trustee
Siobhan Lough, Senior Consultant, Hymans Robertson
Mick McAteer, Co-Director, The Financial Inclusion Centre
Stuart McDonald MBE, Head of Longevity and Democratic Insights, LCP
Anusha Mittal, Managing Director, Individual Life and Pensions, M&G Life
Shelley Morris, Senior Project Manager, Living Pension, Living Wage Foundation
Sarah O'Grady, Journalist
Will Sherlock, Head of External Relations, M&G Plc
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
David Sinclair, Chief Executive, ILC
Jordi Skilbeck, Senior Policy Advisor, Pensions and Lifetime Savings Association
Rt Hon Sir Stephen Timms, former Chair, Work & Pensions Committee
Nigel Waterson, ILC Trustee
Jackie Wells, Strategy and Policy Consultant, ILC Strategic Advisory Board
Fabular Frames and the Four Ratio ProblemMajid Iqbal
Digital, interactive art showing the struggle of a society in providing for its present population while also saving planetary resources for future generations. Spread across several frames, the art is actually the rendering of real and speculative data. The stereographic projections change shape in response to prompts and provocations. Visitors interact with the model through speculative statements about how to increase savings across communities, regions, ecosystems and environments. Their fabulations combined with random noise, i.e. factors beyond control, have a dramatic effect on the societal transition. Things get better. Things get worse. The aim is to give visitors a new grasp and feel of the ongoing struggles in democracies around the world.
Stunning art in the small multiples format brings out the spatiotemporal nature of societal transitions, against backdrop issues such as energy, housing, waste, farmland and forest. In each frame we see hopeful and frightful interplays between spending and saving. Problems emerge when one of the two parts of the existential anaglyph rapidly shrinks like Arctic ice, as factors cross thresholds. Ecological wealth and intergenerational equity areFour at stake. Not enough spending could mean economic stress, social unrest and political conflict. Not enough saving and there will be climate breakdown and ‘bankruptcy’. So where does speculative design start and the gambling and betting end? Behind each fabular frame is a four ratio problem. Each ratio reflects the level of sacrifice and self-restraint a society is willing to accept, against promises of prosperity and freedom. Some values seem to stabilise a frame while others cause collapse. Get the ratios right and we can have it all. Get them wrong and things get more desperate.
Every business, big or small, deals with outgoing payments. Whether it’s to suppliers for inventory, to employees for salaries, or to vendors for services rendered, keeping track of these expenses is crucial. This is where payment vouchers come in – the unsung heroes of the accounting world.
The Rise and Fall of Ponzi Schemes in America.pptxDiana Rose
Ponzi schemes, a notorious form of financial fraud, have plagued America’s investment landscape for decades. Named after Charles Ponzi, who orchestrated one of the most infamous schemes in the early 20th century, these fraudulent operations promise high returns with little or no risk, only to collapse and leave investors with significant losses. This article explores the nature of Ponzi schemes, notable cases in American history, their impact on victims, and measures to prevent falling prey to such scams.
Understanding Ponzi Schemes
A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from legitimate profit earned. The scheme relies on a constant influx of new investments to continue paying the promised returns. Eventually, when the flow of new money slows down or stops, the scheme collapses, leaving the majority of investors with substantial financial losses.
Historical Context: Charles Ponzi and His Legacy
Charles Ponzi is the namesake of this deceptive practice. In the 1920s, Ponzi promised investors in Boston a 50% return within 45 days or 100% return in 90 days through arbitrage of international reply coupons. Initially, he paid returns as promised, not from profits, but from the investments of new participants. When his scheme unraveled, it resulted in losses exceeding $20 million (equivalent to about $270 million today).
Notable American Ponzi Schemes
1. Bernie Madoff: Perhaps the most notorious Ponzi scheme in recent history, Bernie Madoff’s fraud involved $65 billion. Madoff, a well-respected figure in the financial industry, promised steady, high returns through a secretive investment strategy. His scheme lasted for decades before collapsing in 2008, devastating thousands of investors, including individuals, charities, and institutional clients.
2. Allen Stanford: Through his company, Stanford Financial Group, Allen Stanford orchestrated a $7 billion Ponzi scheme, luring investors with fraudulent certificates of deposit issued by his offshore bank. Stanford promised high returns and lavish lifestyle benefits to his investors, which ultimately led to a 110-year prison sentence for the financier in 2012.
3. Tom Petters: In a scheme that lasted more than a decade, Tom Petters ran a $3.65 billion Ponzi scheme, using his company, Petters Group Worldwide. He claimed to buy and sell consumer electronics, but in reality, he used new investments to pay off old debts and fund his extravagant lifestyle. Petters was convicted in 2009 and sentenced to 50 years in prison.
4. Eric Dalius and Saivian: Eric Dalius, a prominent figure behind Saivian, a cashback program promising high returns, is under scrutiny for allegedly orchestrating a Ponzi scheme. Saivian enticed investors with promises of up to 20% cash back on everyday purchases. However, investigations suggest that the returns were paid using new investments rather than legitimate profits. The collapse of Saivian l
What Lessons Can New Investors Learn from Newman Leech’s Success?Newman Leech
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Effect of external debt on economic growth of nigeria
1. Journal of Economics and Sustainable Development www.iiste.org
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.3, No.8, 2012
Effect of External Debt on Economic Growth of Nigeria
Sulaiman, L.A. (Corresponding author)
Banking and Finance Department, Faculty of Management Sciences,
Ekiti State University, Ado Ekiti, Nigeria.
Phone: +2348038088281 E-mail: sulaimanluq01@gmail.com
Azeez, B.A.
Banking and Finance Department, Faculty of Management Sciences,
Ekiti State University, Ado Ekiti, Nigeria.
Phone: +2348028388763 E-mail: aminahotulana@yahoo.com
Abstract
The study examines the effect of external debt on the economic growth of Nigeria. The model built for the study
proxy gross domestic product as the endogenous variable measuring economic growth as a function of external debt,
ratio of external debt to export, inflation, and exchange rate proxy as the exogenous variables. Annual time series
data was gathered from the Central Bank of Nigeria Statistical bulletin and Debt Management Office from 1970 to
2010. The econometric techniques of Ordinary Least Square(OLS), Augmented Dickey-Fuller (ADF) Unit Root test,
Johansen Co-integration test and Error Correction Method (ECM) are employed in the empirical analysis. The
co-integration test shows that long-run equilibrium relationship exist among the variables. The findings from the
error correction method show that external debt has contributed positively to the Nigerian economy. The study
recommends that government should ensure economic and political stability and external debt should be acquired
largely for economic reasons rather than social or political reasons.
Keywords: External Debt, Economic Growth, Gross Domestic Product, Error Correction Method.
1. Introduction
No government is an island on its own; it would require aid so as to perform efficiently and effectively. One major
source of aid is foreign borrowing or external debt. The motive behind external debt is due to the fact that countries
especially the developing ones lack sufficient internal financial resources and this calls for the need for foreign aid.
The dual-gap analysis provides the framework which shows that the development of a nation is a function of
investment and that such investment which require domestic savings is not sufficient to ensure that development take
place (Oloyede, 2002). Hence, the importance of external debt on the growth process of a nation cannot be
overemphasized. Hameed, Ashraf, and Chaudhary (2008) stated that external borrowing is ought to accelerate
economic growth especially when domestic financial resources are inadequate and need to be supplemented with
funds abroad.
External debt is a major source of public receipts. The accumulation of external debt should not signify slow
economic growth. It is a country’s inability to meet its debt obligation compounded by the lack of information on the
nature, structure and magnitude of external debt (Were, 2001). Soludo (2003) opined that countries borrow for two
broad categories; macroeconomic reasons to either finance higher investment or higher consumption and to
circumvent hard budget constraint. This implies that an economy borrow to boost economic growth and alleviate
poverty. He argued that when debt reaches a certain level, it becomes to have adverse effect, debt servicing becomes
a huge burden and countries find themselves on the wrong side of the debt-laffer curve, with debt crowding out
investment and growth. The debt service burden has militated against Nigeria’s rapid economic development and
worsened the social problems (Audu, 2004).
According to Omoleye, Sharma, Ngussam, and Ezeonu (2006), Nigeria is the largest debtor nation in the
Sub-Saharan Africa. The genesis of Nigeria’s external debt can be traced to 1958 when 28 million US dollars was
contracted from the World Bank for railway construction. Between 1958 and 1977, the need for external debt was on
the low side. However, due to the fall in oil prices in 1978 which exerted a negative influence on government
finances, it became necessary to borrow to correct balance of payment difficulties and finance projects. The first
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ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.3, No.8, 2012
major borrowing of 1billion US dollars referred to as Jumbo loan was contracted from the international capital
market (ICM) in 1978 increasing the total to 2.2 billion U.S dollars (Adesola, 2009). The spate of borrowing
increased thereafter with the entry of the state government into external loan contractual obligation. According to the
Debt Management Office (DMO), Nigeria’s external debt outstanding stood at N17.3 billion. In 1986, Nigeria had to
adopt a World Bank/International Monetary Fund (IMF) sponsored Structural Adjustment Programme (SAP), with a
view to revamping the economy making the country better-able to service her debt (Ayadi and Ayadi, 2008).
The increasing fiscal deficits driven by the higher level of external debt servicing is a major threat to growth of the
nation. The resultant effect of large accumulation of debt exposes the nation to high debt burden. Nigeria is about the
richest on the continent of Africa, yet due to the numerous macro-economic problems, such as inflation,
unemployment, sole dependency on crude oil as a major source of revenue, corruption and mounting external debt
and debt service payment, majority of her citizen fall below the poverty line. Therefore, the study seeks to
thoroughly and empirically investigate the consequential effect of Nigeria’s external debt on her economy and arrive
at a logical conclusion. The findings from the study will be of utmost importance because policy recommendations
will be given on the basis of its findings. The next section reviews various literatures, section three deals with the
methodology, section four presents the data analysis and interpretation while the last section provides the conclusion
and recommendations.
2. Literature Review
Countries experiencing fiscal deficits, especially the developing ones borrow to improve their economic growth.
Government borrows in principle to finance public goods that increase welfare and promote economic growth
(Ogunmuyiwa, 2011). Due to the fact that the domestic financial resources are not adequate, borrowing is acquired
from foreign sources. The amount of fund provided by these foreign sources constitutes the external debt of a nation.
In Nigeria, external debt is sourced from Multilateral agencies, Paris club creditors, London club creditors,
Promissory Note holders and other creditors. External debt is one of the sources of financing capital formation in any
country (Ayadi and Ayadi, 2008).
External debt is acquired to contribute meaningfully to the economy but the future debt service payment poses a
threat to economic growth. A number of researchers have examined the effect of external debt on economic growth
since the beginning of the new millennium.
Ayadi and Ayadi (2008) examined the impact of the huge external debt, with its servicing requirements on economic
growth of the Nigerian and South African economies. The Neoclassical growth model which incorporates external
debt, debt indicators, and some macroeconomic variables was employed and analyzed using both Ordinary Least
Square (OLS) and Generalized Least Square (GLS) methods. Their finding revealed negative impact of debt and its
servicing requirement on the economic growth of Nigeria and South Africa. Ogunmuyiwa (2011) examined whether
external debt promotes economic growth in Nigeria using time-series data from 1970-2007. The regression equation
was estimated using econometric techniques such as Augmented Dickey-Fuller test, Granger causality test, Johansen
co-integration test and Vector Error Correction Method (VECM). The results revealed that causality does not exist
between external debt and economic growth in Nigeria.
Adesola (2009) empirically investigated the effect of external debt service payment practices on the economic
growth of Nigeria. Ordinary Least Square method of multiple regression was used to examine how debt payment to
multilateral financial creditors, Paris club creditors, London club creditors, Promissory Notes holders and other
creditors relates to gross domestic product (GDP) and gross fixed capital formation (GFCF) using data from 1981 to
2004. The study provides evidence that debt payment to Paris club creditors and Promissory Notes holders are
positively related to GDP and GFCF while debt payment to London club creditors and other creditors show a
negative significant relation to GDP and GFCF. Audu (2004) examined the impact of external debt on economic
growth and public investment in Nigeria from 1970-2002. The empirical investigation was done using the
Co-integration test and Error Correction Method. The study shows that debt servicing pressure in the country has had
a significant adverse effect on the growth process and past debt accumulation negatively affect public investment.
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Adepoju, Salau and Obayelu (2007) analyzed the effects of external debt management on the economic growth of
Nigeria for a period between 1962 to 2006 using time-series data of the various bilateral and multi lateral
arrangements. Their study concluded that accumulation of external debt adversely affected Nigeria’s economic
growth.
Empirical studies not related to Nigeria are also reviewed to show evidence from other countries. Choong, Lau,
Liew, and Puah (2010) examined the effect of different types of debts on the economic growth in Malaysia during
the period 1970 – 2006. Using Co-integration test, the findings suggest that all components of debts have a negative
effect on long run economic growth. The Granger causality test reveals the existence of a short-run causality linkage
between all debt measures and economic growth in the short-run. Abdelmawla and Mohammed (2005) investigated
the impact of external debt on economic growth of Sudan from a period spanning 1978 – 2001. The study showed
that export earnings have a significant positive impact while external debt and inflation had negative impact on
Sudan’s economic growth.
Karogol (2002) investigated both the short-run and long-run relationships between economic growth and external
debt service for Turkey during 1956 – 1996. The study employed a standard production function model analyzed
using multivariate co-integration techniques. The Vector Autoregression estimates showed that there exists one
Co-integration equation. It also revealed that debt service is negatively related to economic growth in the long-run.
The causality test showed uni-directional causality between debt service and economic growth. Clements,
Bhattacharya, and Nguyen (2003) examined the channels through which external debt affects growth in low income
countries. Their results suggest that the substantial reduction in the stock of external debt projected for highly
indebted poor countries (HIPC) would directly increase per capita income growth by about 1 percentage point per
annum. Reductions in external debt service could also provide an indirect boost to growth through their effects on
public investment.
Malik, Hayat, and Hayat (2010) explored the relationship between external debt and economic growth in Pakistan for
the period between 1972 – 2005, using time series econometric technique. Their result shows that external debt is
negatively and significantly related to economic growth. The evidence suggests that increase in external debt will
lead to decline in economic growth. Previous study by Hameed et al. (2008) on Pakistan analyzed the long run and
short run relationships between external debt and economic growth. Annual time series data from 1970 to 2003 was
obtained to examine the dynamic effect of GDP, debt service, capital stock and labour force on her economic growth.
The study concludes that debt servicing burden has a negative effect on the productivity of labor and capital, thereby
adversely affecting economic growth.
3. METHODOLOGY
3.1 Data Sources and Method of Analysis
The study employed data that are secondary in nature. The annual time series data was obtained from the Central
Bank of Nigeria Statistical Bulletin and Debt Management Office from 1970-2010. The methods of analysis or
estimation techniques include Ordinary Least Square (OLS) method, Augmented Dickey-Fuller (ADF) Unit Root
test, Johansen Co-integration test and Error Correction Method (ECM). The estimation technique follows a
three-step modeling procedure;
i. The stationarity of data must be established and the order of integration determined.
This is done employing the Augmented Dickey-Fuller (ADF) unit root test. Time series data are
assumed to be non-stationary; therefore it is necessary to carry out the unit root test because of the problem of
non-stationary data producing spurious results.
ii. After establishing the stationarity of data, Johansen co-integration test is applied. The Co-integration test
determines whether a long run equilibrium relationship exist among the variables.
iii. When the variables are found to be co-integrated, an over-parameterized model. (ECM1) is developed which
involves leading and logging of the variables, after which a parsimonious model (ECM2) is built which
introduces short run dynamism into the model.
3.2 Model Specification
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The study hypothesized that external debt does not have a significant effect on the economic growth of Nigeria. The
model proxied Gross Domestic Product (GDP) as the endogenous variable to measure economic growth while
External Debt (EXD), Ratio of External debt to Exports (EXD/X), Inflation (INF) and Exchange Rate (EXR)
represent the exogenous variables. The a priori expectation for the coefficients in the model are B1, B2, > 0 while B3,
B4 , < 0
The econometric form of the model is specified as; GDP = f(EXD, EXD/X, INF, EXR)
The econometric equation becomes;
GDP = BO + BIEXD + B2 EXD/X + B3INF + B4EXR + e…………… (i)
Where;
BO = Intercept of relationship in the model/constant
B1 – B4 = coefficient of each exogenous variable
e = stochastic or error term
Stating the error correction model (ECM) from equation (i), the model becomes;
∆Log EXRt-1 = BO + BI ΣLog EXD t-1 + B2 ΣLog EXD/X t-1 + B3 ΣLog INF t-1 + B4 ΣLog EXR t-1 + ΣECM t-1 + Σt
..........(ii)
Where;
ΣECM = Error Correction Term
t-1 = Variable lagged by one period
Σt = White noise residual.
The hypothesis for the co-integration test is stated thus;
Null hypothesis (H0): BI = B2 = B3 = B4 = 0 (No Co-integration)
Alternative hypothesis (H1): BI ≠ B2 ≠ B3 ≠ B4 ≠ 0 (Co-integration exists)
4. Data Analysis and Interpretation of Results
This section deals with the analysis of data and interpretation of findings. The method of data analysis employed the
Ordinary Least Square (OLS) method, Augmented Dickey-Fuller (ADF) Unit Root Test, Johansen Co-integration
Test and the Error Correction Method. The logarithms of the variables were obtained so as to bring the time-series
data on the variables to the same base.
4.1 Interpretation of Results
Ordinary Least Square (OLS) Result
The table below presents the summary of the OLS results
Table 1
Summary of OLS Results
Endogenous Exogenous Variables R2 Adj. R2 F-Stat
Variable
C EXD EXD/X INF EXR
GDP 2.950372* 0.876129* -0.865923* -0.130776 0.105435 0.966973 0.963303 263.5010*
(0.0140) (0.0000) (0.0000) (0.2485) (0.5735) (0.000000)
Note: Probability value are stated in parenthesis and * means significant at 5% level of significance
Source: Author’s computation
From the above result, the intercept or constant parameter has a positive relationship with GDP and it is statistically
significant. EXD has a significant positive relationship with GDP while EXD/X exerts a significant negative
influence on GDP. INF is not statistically significant but demonstrates a negative relationship with GDP while EXR
also not statistically significant is positively related to GDP. The coefficient of multiple determination (R2) with a
value of 0.966973 implies that approximately 97%of total variation in GDP is explained by EXD, EXD/X, INF, and
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EXR while the remaining 3% is accounted for by factors not specified in the model. F-statistics value of 263.5010
shows that the model is significant i.e. it sufficiently captures the effect of external debt on economic growth and this
is further justified by the probability value of 0.000000.
The OLS results is short run oriented in nature and because of the problem of non-stationarity of data, spurious
regression is likely to occur. Hence, the stationarity of data is established using the Augmented Dickey-Fuller (ADF)
Unit Root Test.
4.2 Augmented Dickey-Fuller (ADF) Unit Root Test
Time series data are assumed to be non stationary and this implies that the results obtained from the OLS method
may be misleading. In this vein, it is cognizant that stationarity test should be conducted. The stationarity test is
carried out using the Augmented Dickey-Fuller (ADF) Unit Root Test. The stationarity of data is essential for the
Johnasen co-integration test. The decision rule for the ADF Unit root test states that the ADF Test statistic value
must be greater than the Mackinnon Critical Value (a) 5% at absolute term for stationarity to be established at level
and if otherwise, differencing occurs using the same decision rule.
Table 2 shows the results of the stationarity test in summary and the order of integration.
Table 2
ADF Unit Root Test and Order of Integration
Variables ADF Test Statistic 5% Mackinnon Remark Order of
Value Critical Value Integration
GDP -6.782049 -2.9399 Stationary I(1)
EXD -3.661568 -2.9399 Stationary I(1)
EXD/X -3.819740 -2.9399 Stationary I(1)
INF -4.631006 -2.9378 Stationary I(0)
EXR -3.713246 -2.9399 Stationary I(1)
Source: Author’s Computation
From Table 2, it could be deduced that all the variables were stationary at first difference i.e. I(1) series with the
exception of only INF which was stationary at level i.e. I(0) because its respective ADF statistic value is greater than
the Mackinnon Critical Value @ 5% at absolute term before differencing.
4.3 Johansen Co-Integration Test
The co-integration test establishes whether a long-run equilibrium relationship exist among the variables. To
establish co-integration, the likelihood ratio must be greater than the Mackinnon Critical Value @ 1% and 5% levels
of significance and the co-integrating equation is chosen from the normalized co-integrating coefficient with the
lowest log likelihood.
Table 3
Result of Johansen Co-integration Test
Maximum Eigen Trace Statistics 5% Critical Value 1% Critical Hypothesized No.
Value Value CE(S)
0.56869 88.62387 68.52 76.07 r = 0**
0.419972 55.83862 47.21 54.46 r ≤ 1**
0.338079 34.59616 29.68 35.65 r ≤ 2*
0.259585 18.50439 15.41 20.04 r ≤ 3*
0.159642 6.783171 3.76 6.65 r ≤ 4**
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*denotes rejection of the hypothesis at 5% significance level and **denotes rejection of the hypothesis at both 5%
and 1% significance levels.
Source: Author’s Computation.
Using the trace statistics, it indicates five co-integrating equations at 5% significance level which implies that long
run relationship exists among the variables. This led to the rejection of the hypothesis of no co-integration. The
co-integrating equation chosen from the Normalized co-integrating coefficients is;
GDP = -1.390662EXD + 1.200221EXD/X + 0.607099INF + 0.617005EXR
(0.15249) (0.11566) (0.14304) (0.20466)
Note: Standard Error statistics are stated in parenthesis
From the co-integrating equation, all the exogenous variables except EXD has a positive relationship with GDP in
the long run. In the long run, a unit increase in EXD/X, INF, and EXR leads to a rise in GDP by 1.200221, 0.607099,
and 0.617005 units respectively while an increase (decrease) in EXD will cause GDP to decrease (increase) by
1.390662 units.
4.4 Error Correction Model (ECM)
Co-integration is a prerequisite for the error correction mechanism. Since co-integration has been established, it is
pertinent to proceed to the error correction model. The first step in ECM is developing an over-parameterized model
(ECM) and then the parsimonious model (ECM 2).
Table 4
Result of the Over-Parameterized Model (ECM 1)
Dependent Variable=D (GDP,2)
Variable Coefficient Standard Error t-statistics Probability Value
C 0.010782 0.084977 0.126883 0.9000
D(GDP(-1),2) -0.439236 0.091472 -4.801865 0.0001
D(EXD,2) 0.228185 0.297134 0.767953 0.4492
D(EXD(-1),2) 0.167533 0.270624 0.619064 0.5411
D(EXD/X, 2) -0.592905 0.184776 -3208772 0.0037
D(EXD/X(-1),2) -0.306498 0.181236 -1.691159 0.1023
D(INF,2) -0.137498 0.078974 -1741051 0.0931
D(INF(-1),2) 0.023443 0.075412 0.310864 0.7583
D(EXR,2) 1.390977 0.343919 4.044489 0.0004
D(EXR(-1),2) 0.363580 3.399493 0.910104 0.3708
ECM(-1) -1.358918 0.223326 -6.084906 0.0000
R2 = 0.886812 Adj R2 = 0.844890 f-statistics = Prob (F-Statistics
21.15411 = 0.000000
Source: Author’s Computation
The results of the over-parameterized model presented in Table 4 show that the error correction term i.e. ECM(-1) is
negative and significant. Its coefficient implies that the speed of adjustment is high. The R2 signifies that all the
explanatory variables in the model accounts for 88.7% total variation in GDP while the remaining 11.3% is attributed
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to the white noise residual. The F-Statistic value of 21.15411 with a probability value of 0.000000 shows that the
whole model is significant.
However, there is need to simplify the error correction model by estimating a parsimonious model (ECM 2)
developed from the over-parameterized model (ECM 1).
Table 5
Result of the Parsimonious Model (ECM 2)
Dependent Variable = D(GDP, 2)
Variable Coefficient Standard Error t-statistics Probability
Vaulue
C 0.008932 0.085676 0.104251 0.9176
D(GDP(-1),2) -0.381009 0.075703 -5.032969 0.0000
D(EXD,2) 0.094117 0.253013 0.371983 0.7124
D(EXD/X, 2) -0.469663 0.156157 -3.007630 0.0052
D(INF,2) -0.131075 0.071231 -1.840133 0.0753
D(EXR,2) 1.187700 0.317559 3.740091 0.0007
ECM(-1) -1.315995 0.220994 -5.954882 0.0000
R2 = 0.867613 Adj R2 = 0.841989 f-statistics = Prob (F-Statistics
33.86025 = 0.000000
Source: Author’s Computation
From the table 5, the ECM equation is stated thus;
GDPt = 0.008932 + 0.094117EXDt-1 – 0.469663EXD/X*t-1 – 0.131075INF*t-1+1.187700EXR*t-1 – 1.315995ECM*t-1
Note: * denotes that the parameter is statistically significant.
The ECM equation shows that EXD has a positive but not significant relationship with GDP. The positively signed
coefficient of EXD is in conformity with the a priori expectation. A unit increase in EXD consequently means that
GDP rises by 0.094117 units. The findings suggest that external borrowing is beneficial to Nigeria but it does not
play much of an important role in the growth process of Nigeria. This could be attributed to the fact that the external
borrowing have not been channeled to highly productive activities that would increase the overall output of the
economy instead debt have been contracted for capital projects such as construction of roads etc. EXD/X exerts a
significant negative pressure on GDP. This goes against the a priori expectation. A unit increase in the ratio of
external debt to exports leads to a decline in GDP by 0.469663 units. This implies that external debt has crowded out
the positive impact of exports on the economy. This is due to fact that export earnings have not been adequate to pay
debts and that the nation is highly dependent on imports. INF in conformity with the a priori expectation is
negatively related to GDP and it is statistically significant. A unit increase in INF leads to 0.131075units decrease in
GDP. This implies that the external borrowing has made government expenditure to rise thereby increasing the
inflation rate in the economy and major bulk of the external debt is expended on activities that provide social and
political benefits rather than economic benefits. EXR has a positive relationship with GDP, thus contradicting the a
priori expectation and it is significant on GDP. The implication of EXR connotes that the rate at which Naira is being
converted to a key currency (US dollar) allowed the nation to service its debt properly without deteriorating
economic growth, hence, Nigeria did not suffer heavy debt burden because the Naira competed well in global
market. The coefficient of ECM(-1) is significant with the appropriate negative sign. Its coefficient of -1.315995
means that the present value in GDP adjusts rapidly to previous changes in EXD, EXD/X, INF, and EXR.
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The R2 in the parsimonious model shows that the exogenous variables in the ECM equation explains 87% of total
variation or changes in GDP and the remaining 13% is accounted for by factors outside the model. Also, the
F-Statistic of 33.86025 in ECM 2 with its probability value of 0.000000 provides basis to logically conclude that the
overall result obtainable in ECM 2 is statistically significant.
5. CONCLUSION AND RECOMMENDATIONS
External debt plays a crucial role in an economy. The optimal utilization of external debt by the government would
avoid debt overhang and crowding out of investments. The bane of the study has been to examine the effect of
external debt on the economic growth of Nigeria. The study employed the Johansen co-integration test and Error
Correction Method. The co-integration test shows the existence of long run equilibrium relationship among the
variables. The error correction method reveals that the lagged error correction term in the over-parameterized and
parsimonious models is significant judging from its negatively signed coefficient.
The high coefficient of multiple determination (R2) in the over-parameterized model (88.7%) and the parsimonious
model (87%) led to the overwhelming rejection of the null hypothesis which states that external debt does not have a
significant effect on the economic growth of Nigeria. Also, the F-statistics shows that the time to time behaviour of
external debt, ratio of external debt, inflation, and exchange rate all put together cause a significant change on the
Nigerian economy.
Based of the findings in the study, recommendations were made. Firstly, the government should ensure economic
and political stability in order to enjoy the benefits of external debt and make the debt burden minimal. Secondly,
government should acquire external debt largely for economic reasons rather than social or political reasons. This
would increase the productivity of the nation. Thirdly, government should diversify the nation’s export base so as to
increase export earnings and promote industrialization in order to reduce import dependency. Also, the government
through its monetary authorities should put measures in place to curtail the inflationary trend in the economy.
Furthermore, stability in the exchange rate should be pursued and depreciation in the Naira should be avoided by the
government. Lastly, government should press for permanent debt relief so as to avert debt overhang problem.
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