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.
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.
The aim of this study is to examine the impact of international capital flows on the economic growth in Jordan during the period from 2005 to 2017, The study also examines trends and composition of capital inflows. The study used descriptive analytical research method which was appropriate for the purpose of research. By using time series data, the study found that Foreign Direct Investment (FDI), foreign portfolio investment (FPI), grants (Gr) and Worker remittances (WR) are positively affecting the economic growth direct contribution. Based on the research results, the study came with a several recommendations, the most important recommendation is; the government of Jordan should create and relax the rules and regulations to attract more investors, and also the government should work hand in hand with the developed countries to create economic and employment opportunities, improve the country’s competitiveness, and expand growth within the private sector so that everyone in Jordan has the opportunity to contribute to a brighter future.
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:
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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.
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.
Growth-Debt Nexus: An Examination of Public Debt Levelsand Debt Crisis in Zim...iosrjce
Government debt is an indirect debt of the taxpayers, and can be classified as internal or external.
Debt crisis is the general term for a proliferation of massive public debt relative to tax revenues.Public debt
enables governments to invest in critical areas of the economy where the capacity of tax revenue to undertake
these projects may be limited or in situations where printing additional money will disrupt the stability of the
economy. Government borrows in order defer difficult but necessary reforms such as the imposition of taxes
which might be necessary to generate revenue for development. Countries with high public debt tend to grow
slowly. The study examines the origin of debt crisis in Zimbabwe, debt nature, causes, consequences and
possible ways of reducing the debt. The study uses 1980-2013 data to run an OLS model on economic growth
using STATA Econometric Software, in an effort to explore the effect of external debt. The regression results
shows that public debt has a negative effect on economic growth in Zimbabwe, which has varying theories
prevailing. The study concludes by encouraging the government not to borrow unnecessarily, and to use
borrowed funds for investment projects, rather than on consumption expenditure
The study is on the effect of Net capital inflow on inclusive growth in Nigeria. This study seeks to deepen the understanding on how capital inflow creates opportunity for inclusive growth in Nigeria through increase in GDP per capita. The objective of the study were to : determine the effect of Net capital inflow , Net foreign direct investment and trade openness on inclusive growth in Nigeria. The study employed the time series data in its analysis. The period of analysis spanned through 1980-2015 and the dataset required for the analysis were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and National bureau of statistics publications. The study conducted trend analysis, descriptive analysis. The data were also tested for stationarity using the Augmented Dickey Fuller (ADF) unit root test and Ordinary Least Square (OLS) analytical techniques, cointegration test and error correction mechanism. It was evident from the unit root test that the variables were fractionally integrated while the cointegration test reveals that long run relationship exists among the variables. The findings equally reveal that capital inflow exerts significant negative influence on GDP per capita. This could be attributed to the problem of managing external capital flows which has been sub-optimal in most developing economies including Nigeria. The implication of this finding is that the perceived benefits that are associated with capital inflows tend not to hold sway in Nigeria over the sampled period which may be attributed to institutional and governance failure. Owing to the findings, this study recommends for the adoption of investment friendly policies and ensure transparency and good governance, appropriate economic management practices capable of supporting reforms in the Nigerian financial system and guide international capital inflows to ensure that the associated economic turnarounds are people-centered.
The aim of this study is to examine the impact of international capital flows on the economic growth in Jordan during the period from 2005 to 2017, The study also examines trends and composition of capital inflows. The study used descriptive analytical research method which was appropriate for the purpose of research. By using time series data, the study found that Foreign Direct Investment (FDI), foreign portfolio investment (FPI), grants (Gr) and Worker remittances (WR) are positively affecting the economic growth direct contribution. Based on the research results, the study came with a several recommendations, the most important recommendation is; the government of Jordan should create and relax the rules and regulations to attract more investors, and also the government should work hand in hand with the developed countries to create economic and employment opportunities, improve the country’s competitiveness, and expand growth within the private sector so that everyone in Jordan has the opportunity to contribute to a brighter future.
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
Instagram : arguni.hasnain
Facebook: arguni.hasnain
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.
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.
Growth-Debt Nexus: An Examination of Public Debt Levelsand Debt Crisis in Zim...iosrjce
Government debt is an indirect debt of the taxpayers, and can be classified as internal or external.
Debt crisis is the general term for a proliferation of massive public debt relative to tax revenues.Public debt
enables governments to invest in critical areas of the economy where the capacity of tax revenue to undertake
these projects may be limited or in situations where printing additional money will disrupt the stability of the
economy. Government borrows in order defer difficult but necessary reforms such as the imposition of taxes
which might be necessary to generate revenue for development. Countries with high public debt tend to grow
slowly. The study examines the origin of debt crisis in Zimbabwe, debt nature, causes, consequences and
possible ways of reducing the debt. The study uses 1980-2013 data to run an OLS model on economic growth
using STATA Econometric Software, in an effort to explore the effect of external debt. The regression results
shows that public debt has a negative effect on economic growth in Zimbabwe, which has varying theories
prevailing. The study concludes by encouraging the government not to borrow unnecessarily, and to use
borrowed funds for investment projects, rather than on consumption expenditure
The study is on the effect of Net capital inflow on inclusive growth in Nigeria. This study seeks to deepen the understanding on how capital inflow creates opportunity for inclusive growth in Nigeria through increase in GDP per capita. The objective of the study were to : determine the effect of Net capital inflow , Net foreign direct investment and trade openness on inclusive growth in Nigeria. The study employed the time series data in its analysis. The period of analysis spanned through 1980-2015 and the dataset required for the analysis were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and National bureau of statistics publications. The study conducted trend analysis, descriptive analysis. The data were also tested for stationarity using the Augmented Dickey Fuller (ADF) unit root test and Ordinary Least Square (OLS) analytical techniques, cointegration test and error correction mechanism. It was evident from the unit root test that the variables were fractionally integrated while the cointegration test reveals that long run relationship exists among the variables. The findings equally reveal that capital inflow exerts significant negative influence on GDP per capita. This could be attributed to the problem of managing external capital flows which has been sub-optimal in most developing economies including Nigeria. The implication of this finding is that the perceived benefits that are associated with capital inflows tend not to hold sway in Nigeria over the sampled period which may be attributed to institutional and governance failure. Owing to the findings, this study recommends for the adoption of investment friendly policies and ensure transparency and good governance, appropriate economic management practices capable of supporting reforms in the Nigerian financial system and guide international capital inflows to ensure that the associated economic turnarounds are people-centered.
Impact of Foreign Debt on Economic Growth in Zimbabweiosrjce
The study investigates the impact of foreign debt on economic growth in Zimbabwe. Time series data
covering the period 1980 -2013 is analysed using ordinary least squares regression. Labour force, capital
investment, and trade openness are used as control variables. The results show that external debt and trade
openness impact negatively on economic growth in Zimbabwe while capital investment and labour force growth
has a positive effect. The study recommends that the country should not heavily rely on foreign borrowing to
finance economic growth but should rather create a conducive environment for alternative sources of foreign
funds such as project finance and foreign direct investment. It is further recommended that the country should
curb excessive imports of consumables and encourage value-added exports by local manufacturers.
Net External Liabilities and Economic Growth: A Case Study of pakistansanaullah noonari
By using ordinary least square (OLS) method this study is conducted to see the impact of net external liabilities
on economic growth of Pakistan. Other statistical tools like unit root etc were applied to solve the data problem
as we use time series data for the period 1973-2012. The result of the study found that net external liabilities,
education enrolment, export and gross capital formation has positive significance association with GDP while
debt service relation was found insignificance.
Keywords: Net External Liabilities, Gross Domestic product, Debt service
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
Budget Deficit and Economic Growth in Liberia: An Empirical InvestigationAJHSSR Journal
: This paper investigates the relationship between budget deficits and economic growth in Liberia.
The study employed: the Classical Ordinary Least Squares Technique (OLS); The Augmented Dickey Fuller
(ADF) and Phillip Perron unit root tests for stationarity; the Co-integration test using Engle-Granger Two-Step
procedure (EGTS); and a parsimonious Error Correction Model of the relationship between Budget deficit and
economic growth in Liberia. It is evident from the analysis that there exists a long run relationship between Budget
deficit and economic growth in Liberia. There also exists a positive and significant relationship between Budget
deficit and economic growth in Liberia. Therefore, a 1.0 percent increase in deficits will result in an increase of
approximately 0.42 percent in economic growth in Liberia. The study recommends that government, policy makers
and the monetary authorities should ensure an appropriate mix of monetary and fiscal policies such that would
deliberately and strategically maximize the growth potentials of deficits in Liberia.
JEL Classification : C2, E1, E2, O4, O5
KEYWORDS: Budget Deficit, Economic
This paper examines whether the long-run relationship between budget and external deficits follows the
tenets of the twin-deficit hypothesis, the Ricardian equivalence hypothesis, the current account targeting
hypothesis, or the feedback linkages. It also evaluates the effects of budget and trade deficits on economic growth.
On a global perspective, these have been in the recent period debated in developed and developing nations. In
contributing to this ongoing debate, the study applied unit root tests, cointegration analysis, a dynamic vector
error correction model and a multivariate Toda-Yamamoto long -run Granger-causality representation using
annual time series data for Kenya from 1980 to 2016. There is evidence of unidirectional causality running from
budget deficit to external deficit in support of the twin-deficit hypothesis. In the long run, budget deficit had
significant positive effects while trade deficit had significant negative effects, on real GDP growth. Overall, the
findings suggest that the authorities should promote policies that upscale fiscal discipline, curb budget deficits for
external stability and long-term economic growth, in Kenya. The evidence underscores the need for more country
specific studies in sub-Saharan Africa.
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.
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the world’s largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Transkredit Finance Company Products Presentation (1).pptx
International Journal of Humanities and Social Science Invention (IJHSSI)
1. International Journal of Humanities and Social Science Invention
ISSN (Online): 2319 – 7722, ISSN (Print): 2319 – 7714
www.ijhssi.org Volume 2 Issue 6ǁ June. 2013ǁ PP.42-50
www.ijhssi.org 42 | P a g e
External Debt and the Nigerian Economy: an Empirical Analysis.
1,
Ishola Saheed Ademola1
, Olaleye S. O. (PhD)2,
Ajayi Emmanuel Olusuyi3
,
Giwa Agbolade Babatunde 4
(Head, Internal Control & Audit, National Mirror Newspaper, 159-161, Broad street Lagos, Nigeria)
(Lagos State University, ojo dept. of Economics.)
(Bell University of Technology, ota dept. of Economics/Accounting)
(Federal College of Education (Special) Oyo, Oyo State, Nigeria
Dept. Of Economics)
(Lagos State University, ojo dept. of Business Administartion.)
ABSTRACT: This research work empirically examined the impact of external debt on sustainable economic
growth with particular emphasis on Nigeria between 1980-2010. The study make use of ordinary least square
regression technique to draw out inferences on the relationship between external debt and economic growth. Our
result suggest that 12.3% changes in economic growth is caused by external debt and prime lending rate. We
therefore recommend that government should initiate and develop policies that will address the fundamental
causes external debt. Also, there should be political will on the part of government to ensure proper use of
borrowing to develop other sectors that are crippling. Conclusively, proper debt payment plan should be
formulated and strictly adhered to.
KEYWORDS: External debt, Economic growth, Lending rate and Political will.
I. INTRODUCTION
External debt management refers to the establishment of the condition of issue and redemption of
foreign loans. It involves the proceeds of administering the external public debt that is, providing for the
payment of interest and arranging the refinancing of maturity bonds/debt. It involves a conscious and carefully
planned schedule of the acquisition and retirement of loans contracted either for development purpose or to
support the balance of payments. It makes use of estimates of foreign earnings, sources of exchange finance,
sources of exchange finance, the project returns from the investment and the repayment schedule. It also
includes an assessment of the country’s capacity to service existing debts and a judgment on the desirability of
contracting loans (CBN; 1996).
Nigeria’s economic histories in the pre and post independence era are important in order to understand
the magnitude of her economic problems and the measures in the recent past to combat the external debt crisis
and achieve sustainable economy recovery and growth.
The nation’s inability to meet all its debt service payments constitutes one of the serious obstacles to
the inflow of external resources into the economy. The accumulation of debt service arrears, which is being
compounded with penalty interest, has not permitted reduction in the debt stock, despite the fact that
government has been servicing it external debt with US $2.0 billion annually between 1991 and 1997. The
reasons for this are varied. In some cases, debt problems have mainly stemmed from the efficient use and
control of borrowed funds by debtor countries. In most countries, returns on investment had not even debt
servicing cost. While in others an adequate policy framework for debt management has led to accumulation of
external debts that have proved excessive for the countries debt servicing capacity. Many debtors have faced
much higher than anticipated growth in debt payment relative to their growth in their exports of gods and
services.
II. SELECTED EXISTING LITERATURE
The ways in which a large external debt affects economic growth are deeply investigated by academic
literature both theoretically and empirically. In traditional neo-classical models, the relation between debt and
growth is positive, but this link is flawed by unrealistic assumption of perfect capital mobility.
Therefore, the general assumption is that a debt burden impinges on the rate of economic growth. This
adverse effect works through different channels, related to stock of debt and to interest payment.
The flow effects of debt on economic performance are due to the so called” discourage public
investment, since it soaks up resources from government budget and reduces the amount of money available for
productive investment. This argument can be used also with respect to the debt-poverty nexus, since debt
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service payment shrinks total spending in poverty alleviation programs and in health and education services.
Furthermore, the flow effect is not only related to public investment, since a squeeze in public investment is
likely to reduce private investment as well, given that private agent need investment in basic infrastructure in
order to undertake their investment projects (the degree of substitution between private and public investment is
debated in literature, see Easterly and Schmidt-Hebbel 1999).
With regard to the consequences of a large stock of eternal debt one economic performance, economic
literature has highlighted two different channels through which high debt impinge on economic growth.
Debt overhang:
This means that whether the stock of debt is too large, the expected interest payments are a positive
function of output. Thus, investments decrease, because their return will be taxed away by foreign creditors and
the pace of economic growth will slow down. (Krugman, 1988 and Sachs, 1989).
Uncertainty: The presence of a large external debt makes the macroeconomic environment unstable;
this affect is not only related to the variability of the main macroeconomics indicators (interest rates, exchange
rates, inflation), but also to the policy and institutional framework. The consequences are not only related to
scarce investment, but also to a limited access to international financial markets and to capital flight.
A study of foreign captain inflow and economic development in Nigeria by Osoghale and Amuruhiean
(1987) found that oil exports and direct foreign investment (FDI) were positively related to the importation of
consequently, real gross domestic product was found to be positively associated with oil found to be positively
associated with some strategic sectors, such as manufacturing, transportation and communication, finance and
insurance. These slow the dependency of these sectors on foreign debt in the Nigeria economy. The negative
association of foreign debt with capital resources importation shows that foreign debt does not contribute to
capacity expansion either in manufacturing, transport, communication, finance or insurance. However, when
export is low, more loans are needed to import raw materials and consumables in order to maintain the existing
level of production and employment in these sectors.
Many analysis beloved that the poor investment and growth performance of many highly indebted less
developed countries since the onset of the debt crisis in 1982 can be attributed in part to the dis-incentive effect
of their external debt burden. This phenomenon is usually referred to as “debt overhang” problem.
The debt overhang theory is based on the premise that if debt will exceed the service is likely to be an
increasing function of the country’s output level. Thus, some of the returns from investing in the domestic
economy are effectively “taxed” away by existing foreign creditors and investment by domestic and new foreign
investors is discouraged.
Under such circumstances, the debtor country shares only partially in any increase in output and
exports because a fraction of that increase will be used to increased investment and repayment capacity and, as a
result, the portion of debt outstanding becomes more likely to be repaid. When the effect is strong, the debtor is
said to be on the “wrong side” of the Laffer curve. In this case, the debt Laffer curve refers to the relationship
between the amount of debt repayment and the size of the debt. However, the idea of debt Latter curve also
implies that there is a limit at which debt accumulation stimulates growth Elbadawi et al (1996). In reference to
an aid Laffer curve, Lensik and white (1999) argue that there is a threshold at which more aid is detrimental to
growth.
Also the liquidity constraint is referred to as “crowding out” effect by which the requirement to service
debt reduces funds availability for investment and growth. A reduction in the current debt service should
therefore lead to an increase in current investment for any given level of future indebtedness Cohen, (1993).
Other channels through which the need to service a large amount of external obligations can affect
economic performance, include lack of access to international financial markets and the effects of the stock of
debt on the general level of uncertainty in the economy Chaessens et al (1996).
The scope of debt overhang is much wider in that the effects of debts do not only affect investment in
physical capital but any activity that involves incurring cost up-front for the sake of increased output in the
future. Such activities include investment in human capital (in term of edcauiton and health) and in technology
acquisition whose effect on growth may even be stronger overtime.
Empirical studies on external debt-economic growth relationship are numerous in the literature in both
developed and developing countries. Theoretically, it is expected that the marginal product of capital should be
higher than the world interest rate for developing countries. Then, such countries would benefit from external
borrowing (Eaton 1993). However, external debt only helps to exploit the potentials of a country, it does not
enhance it. Therefore, the only guideline is that the rate of return on spending should exceed the marginal cost of
borrowing on the assumption that debt is paid (Indermit and Brian 2005).
Fischer (1993) while explaining the deficit-debt-growth relationship stated that larger budget surpluses
are associated with more rapid growth through greater capital accumulation and greater productivity growth. He
stated further that, high deficit may be consistent with low inflation for a while, but that a more detailed
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assessment of debt dynamics may be needed to see if the deficit is sustainable and therefore consistent with
macroeconomic stability.
Savvides (1992) while trying to measure the impact of debt overhang on the country’s economic
performance used a Two Stage Limited Dependent Variable model (2SLDV) procedure by cross section time
series data from 43 Less Developing Countries (LDCs) encountering debt problem. The study concludes that
debt overhang and decreasing foreign capital flows have significant negative effect on investment rates. In line
with Savvides (1992), Deshpande (1997) attempted to explain the debt overhand hypothesis by an countries.
The author argues that the adjustment measures, which are applied by severely indebted countries, have an
impact on the indebted countries, since the investment crisis has typical implied a growth for highly indebted
countries. Bauerfreund (1989) also show the external debt payments obligations reduced investment levels in
Turkey, in 1985. He asserted that the debt overhand is as a result of both internal and external economic
policies.
Cohen (1993) estimated an investment equation for a sample of 81 countries over tree sub periods
using ordinary square method (OLS). The author shows that the level of debt does not explain the slowdown of
investment in highly rescheduling developing countries.
Warner (1992) tried to measure the size of debt crisis effect on investment with Least Square
estimation for 13 less developed countries over the period 1982- 1989. He affirmed that the reasons behind the
decline of investment in many heavily indebted countries are declining export prices, high world interest rates
and sluggish growth in developed countries. Rockerbie (1994) criticized Warner (1992) of various shortcoming.
Rockberie (1994) used O.L.S for each of the 13 countries over a sample period of 1965-1990 and the result
affirm that the debt crisis of 1982 had significant effects in terms of dramatic slowdown of investment in less
developed countries. Afxentious and Serieties (1996) in furtherance to Afxentious (1993) examined 55 countries
facing debt service difficulties.
The study’s objective was to find out the relationship between foreign borrowing and productivity over
the period 1970-1990. The results show that during the period 1970-1980, the relationship between indebtedness
and national productivity is not negative. They submitted that the developing countries used the foreign loans to
absorb the shock from oil price increase as painless as possible. However, for the period 1980-1990 when the
debt forgiveness and rescheduling started, the debt crisis and debt overhang affected some indebted countries.
Fosu (1996) tested the relationship between economic growth and external debt in sub Saharan African
countries over the period 1970-1986 using O.L.S method. The study examined the direct and indirect effect of
debt hypothesis. Using a debt-burden measure, the study reveals that direct effect of debt hypothesis shows that
GDP is negatively influenced via a diminishing marginal productivity of capital. The study also finds that on the
average a high debt country faces about one percent reduction in DGP growth annually. Fosu (1999) also
employed an augmented production function to investigate the impact of external debt on economic growth in
1980-1990. The author tested whether external debt as negative effect on economic growth and the findings
show that debt exhibit a negative coefficient.
Cuningham (1993) examined the association between debt burden and economic growth for 16 heavily
indebted countries during the period 1971-1987. The study concludes that the growth of a nation’s debt burden
has a negative effect one economic growth during the period 1970-1979.
Smyth and Hsing (1995) tried to test the impact of federal governances’ debt on economic growth and
examine if the optimal debt ratio exists that will maximize growth. The debt/GDP ratio corresponding to the
maximum GDP growth rate was found to be 38.4%. The results show that during 1980s and early 1990s, federal
debt has a differential role in economic growth. In the early 1980s, debt ratio rose but it was below 38.4, thus
debt-financing stimulates economic growth.
Debt-economic growth nexus has also found significance among several other scholars. Essien and
Onwioduokit (1998) examine the impact of foreign debt on economic growth and they found that the degree of
responsiveness of growth to external finance in Nigeria is elastic. By implication government should only put in
place appropriate debt management strategies to enhance economic growth. The debt burden of a country and
the consequent debt service impose a constraint on the economy in terms of insufficient foreign exchange into
finance importation of raw materials and capital goods needed for economic growth. Another serious constraint
is found in debt overhand theory which states that the accumulated debt burden adversely affect the rate of
private investment. The debt stock acts as tax on future income and production and discourages investment by
the private sector.
Studies including Sach’s (1986) have made a theoretical case for debt overhang effect by analysing the
crowding out effect of debt on service payments. They posit that many highly indebted poor countries frequently
divert foreign exchange resources to meet pressing debt service obligation of interest to policy makers presently
is the effect of debt relief granted some African countries and as put by Burnside and Fanizza (2004), it differs
from previous major debt relief initiatives in that it requires that budgetary resources saved from debt service be
used for poverty reduction purposes. This view however need to be interpreted with caution as many countries
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in Africa have specific-country problems which may not allow the impact of the debt reduction be felt by the
common man. For example in Nigeria, rather than having a positive feel of debt relief, the standard of living of
an average Nigerian has worsen due to escalation of prices of essential commodities and growing food
shortages.
In the findings of Iyoha (2000), he opines that a 75% debt stock reduction would have raised the sub
Saharan African countries for the period investment-GDP ratio by 8.6% and increased GDP by 7.8% and the
debt /GDP ratio will fall by 65%. No doubt, the debt reduction is expected to promote growth. In a study
conducted by Chavin and Kraay (2005) on a sample of 62 low-income countries assessed the extent to which
debt relief induces government to embark on social spending. They conclude that the marginal benefits of debt
relief may no be sure in Africa, Latin American and Asia. Lora and Olivera (2006) test the crowding out effect
of public debt on social services between 1985-2003 and find that the effect comes mostly from stock of debt
and not debt service. They posit that loans from multilateral organization do not ameliorate the adverse
consequences of debt on social expenditures. Thus, if Lora and Olivera’s results hold for Africa, beneficiaries of
debt relief should have increased their expenditure in the social (Dessy and Vencatachellum, 2007).
Evidence from (Dessy and Vencatachellum, 2007) study however show that if a government has a high
discount factor, it will consume than invest once debt relief is granted. This is particularly true of most
developing countries that have high marginal propensity to import.
These findings are consistent with Cooper and Sachs (1985) and Arslanalp and Henry (2004) who
argue that the people faced by debt-relieved countries is lack of good institutions. Thus, if the status-quo
remains the same, the new debt-relief initiative would not achieve their objectives to increase growth promoting
expenditure in these countries. Similar studies that have found relationship between debt and growth include
Cohen (1995), Bovensztem (1990), Elbadawi (1997) and Patillo et al. (2002, 2003). Few other studies did not
find a significant effect of debt on growth and they include Savvides and Dijkstra and Hermes (2001).
On casualty analysis of external debt and growth, Afxentiou and Serletis (1996) used Granger casually
test on a sample of 55 severely indebted countries and the results affirm that no casualty test exists between debt
and income. The test shows that indebtedness is not a specific factor of per capital income growth. Hence,
foreign resources can have a positive effect on economic development if resources are transferred into inputs
since borrowing countries need to have these scarce resources. Amoateng and Amoaka (1996) investigated the
relationship between external debt service and economic growth.
Chowdhury (1994) tried to resolve the Bullow and Rogof’s (1990) proposition by finding the cause and
effect relationship between external debt and economic slowdown in 7 Asian countries for the period 1970-
1988. The results of Granger casualty test show that Bollow and Reogof (1990) proposition that external debt of
developing countries are a symptom rather than a cause of economic slowdown was rejected. The results
confirm a feedback or bi-directional relationship between debt and growth for Malaysia and Philippines.
Karagol (2002) investigated the long run and short run relationship between external debt and economic growth
for Turkey during 1956-1996 and the Granger casualty test result showed a unidirectional casualty from debt to
economic growth.
III. ORIGIN OF NIGERIA’S EXTERNAL DEBT
In the 1950s Nigeria did not have the need to borrow much from abroad and so the outstanding external
debt was small. At the same time, substantial earnings from export of agricultural produce coupled with grants
from the United Kingdom made external borrowing unnecessary. Besides the growth for economic growth was
limited and that was relatively little demand for investment goods since attaining independence in 1960, Nigeria
has had cause at one time of the other to resort to external borrowing for developing purposes. The debt incurred
before 1970 were mainly long-term loans form official sources such as the World Bank and the country’s major
Western trading partners. The debt did not exert much burden on the burden on the economy because interest
charged on the loans were generally low, with grace period ranging from three to ten years and repayment
period of between ten and forty years. (Omoruyi’s 1997).
Moreover, the country had abundant revenue receipts from oil, especially during the oil boom in 1973-
1976. However, a decline in oil receipt in 1977-1998 forced the country to raise the first jumbo loan of $1.0
billion from International Capital market. This loans which had a period of eight years, including a grace of
three years, was used to finance various long term project. Most of which did not yield nay revenue many years
after repayment had commenced.
The recovery of the oil market in 1979 with oil price rising to an all time high to $40.00 per barrel in
1980/1981 led to the notion that the economy was buoyant. A consumption pattern that has favoured imported
goods emerged, the import substitution industrialization strategy that was being adopted then also depend
heavily on imported raw materials and machinery. However, the oil boom was short lived and when it collapsed
in the early 1980s the economy immediately experienced considerable strains and stresses.
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The production and consumption patterns that emerge in the era of oil boom could not be sustained in
the face of declining foreign exchange earnings in the 1990s rather than addressing the problem of decline in
foreign exchange revenue, both federal and state government of the second Republic breached Decree 30 of
1978, which fixed the maximum external loans of the country at $5 billion and embarked on imprudent and
massive external borrowing, particularly from the International Capital Market to finance projects of doubtful
viability. Thus pressure soon mounted on the various sectors of the economy resulting in huge imbalances in
government finances, low external reserves and deficits in the balance of payment among others. Trade credits
in respects of both insured and uninsured trade. Credits started accumulated and the problem so escalated
(Anyanwu 1997).
3.1 SOURCES OF NIGERIA’S EXTERNAL DEBT
The sources of Nigeria’s external debt include:
a) The Paris club of creditors
b) The London club of creditors
c) Multilateral creditors
d) Bilateral and private sector creditors
e) Promissory Note creditors
(a) Paris Club
Is a cartel of creditor countries that came into existence in 1956. It does have a fixed number of
members. Current members of the Paris club are United Kingdom, Germany, France, Italy, Netherland, Spain,
Switzerland, Japan, United States American, Australia, Belgium, Denmark, Finland, Ireland, Australia, Canada,
Norway, and Russia.
(b) The London Club of Creditors
These creditors mainly grant uninsured and unguaranteed loans. Members of the club were crowned in 1976.
They hold meetings concerning issues or problems of repayment.
(c) Multilateral Creditors
They are International Institutions. They include:
ADB-African Development Bank
IBRD-International bank for Reconstruction and Development
IFC-International Finance Corporation
IDA-International Development Association
ECC-European Economic Community
(d) Bilateral and Private Sector Creditors
These creditors usually grant loans for development purposes. Members are ECC (now European
Union), The United States of America, The East European countries and Japan. White private sector creditors
issue short-term loans and they are extended by commercial banks and individual foreign suppliers.
(e) Promissory Note Creditors
These creditors grant uninsured trade loans, resulting mainly from trade arrears. In 1982 and 1983,
Nigeria had trade arrears, these arrears were financed by promissory notes.
3.2 The Debt Relief For Nigeria
With progress made from the reduction of resources directed to debt servicing in 2004, the
implementation of a home-gown economic reform programme, the National Economic Empowerment and
Development Strategy (NEEDS), coupled with improvements in economic governance and the anti corruption
drive of the Obasanjo administration, added incentives to the quest for debt relief for Nigeria among creditor
nations. Also, it was argued that a debt relief was necessary if Nigeria was to achieve the objectives under
NEEDS, as well as meet the Millennium Development Goals (MDGs) by 2015.
Consequently, on June 27 2005, the country secured a major breakthrough in her quest for debt relief,
with the Paris club agreement to grant Nigeria an International Development Asstiance (IDA) which was
supportive of the debt relief struggle. To give a practical effect to this, a delegation from the country met with
the Paris club creditors on October 20, 2005 and a final agreement was reached to cancel 60% (US$ 18 billion)
of Nigeria’s debt with Paris club. The breakdown of the debt owed to Paris club was; Principal balance – US$
25,199,180.0, Arrears -US$5,684,634.53, Total - US$30,883,814.53
The agreement involved a debt reduction under the Naples terms, on eligible debt after reduction. This
was to be implemented in two phases, conditional on the implementation of a comprehensive economic reform
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programme under the Policy Support Instrument (PSI) as approved by the executive board of the International
Monetary Fund (IMF) on October 17, 2005. The Naples terms are a more generous debt relief package reserved
only for lower income countries d good performance on their reform programme.
In the fist phase, Nigeria undertook to pay arrears of US$6.3 billion due on all categories of debts,
while the Paris club creditors would grant a 33.0%. The second phase would become due after the approval of
the first review of the PSI by the Executive Board of the International Monetary Fund during the first half of
2006. Then, Nigeria would pay US$ 6.1billion, the amount due under the post cut off date debt. The Paris club
creditors grant a further cancellation of 34.0% on eligible debts and then buyback the remaining eligible debts.
The execution of the fifth bilateral agreement with the Paris club creditors would facilitate the resumption of
normal bilateral economic relationship with the member countries. The total amount to be paid under the debt
relief to complete the exist strategy from Paris club debt overhand amounted to US$ 12.4 billion.
According to Debt Management Office (DMO), Nigeria’s total debt as at June ending 2006 stood at $16.9
billion.
With the completion of the Paris club debt, the DMO stated that the priorities of the government would
be to review and update earlier projections of the first workshop; ensure regular conduct of the DSA and build
national capacity for Debt Strategy Analysis.
Nigeria’s debt stock was reduced to a low percent of the country’s GDP; achievable when the Paris club of
creditor nation granted the country debt relief, after rigorous technical negotiation and tremendous level of
diplomatic initiative geared towards gathering the support of the international community.
IV. MODEL SPECIFICATION
The econometric model will specify the relationship between the rate of External debt in Nigeria and its growth
rate.
The general form of the model is Y = f (x1, x2)
The specified form of the model is GDP = f (EXDS, PLR)
The model is expressed as GDP = b0 + b1 EXDS + b2PLR + U
Where; GDP = Gross Domestic Product
EXDS = Total external debts
PLR = Prime lending rate
b0 – Intercept of the relationship
b1and b2 – Measure of the slope
U – Error term/stochastic variable
The multi linear regression model relates GDP to the explanatory variable EXDS and PLR.
A priori Expectation
GDP = b0 - b1 EXDS - b2PLR + U
4.1 MODEL ESTIMATION
The above model is esteemed with the aid of the Statistical Package for Social Scientists (SPSS).
Method of estimation is OLS. Estimation is based on data in table below. The result of estimation is presented in
table below.
Regression Result
Variable Coefficient Std. Error T-stat Sig.
Constant 145.046 65.178 2.225 0.035
EXDS -0.093 0.222 -0.419 0.679
PLR -6.666 3.466 -1.923 0.065
R-Square = 0.123
Adjusted R-Square = 0.058
R = 0.351
F-stat = 1.892
Sig. of F-stat = 0.170
Source: SPSS Regression Output
4.2 Evaluation Of Result
In this section, the estimated model is discussed to ascertain whether the model coefficients are
consistent with a priori expectations.
GDP = b0 - b1 EXDS - b2PLR + U
GDP = 145.046 – 0.093EXDS - 6.666PLR
S.E = (65.178, (0.222), (3.466
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T test = (2.225), (-0.419), (-1.923)
R2 = 0.123
F test = 1.892
N – 30
The positive intercept (b0) of 145.046, indicates that when the independent variables indicated in this
study are zero (EXDS and PLR), the expected earnings of the GDP is about N145.046 million. This implies that
a level of GDP is attainable even at zero value of the explanatory variables.
The negative coefficient of EXDS implies that a unit change in the total external debt will bring about a
0.093% decrease in the rate of GDP. Thus, external debt has an effect has an adverse effect on the GDP of the
Nigerian economy.
The negative coefficient of PLR implies that a change in the prime lending rate will bring about 6.66%
decrease in the rate GDP. Thus, the prime lending rate has an adverse effect on the GDP of the Nigerian
economy.
The coefficient of determinant (R2
) shows the percentage of the total variation of the dependent
variable being explained by the changes of the explanatory variables. According to the regression analysis R2
=
0.123 which is low and this implies that 12.3% of the changes in GDP in Nigeria are caused by the EXDS and
PLR. The remaining 87.7% changes in GDP are explained by the stochastic variable U. this implies that changes
in EXDS and PLR are insignificant to explain changes in GDP. Therefore H0 will be accepted while H1 will be
rejected.
The standard error test measures, and establishes the degree of confidence in their validity. This test
state that for an estimates to be statically meaningful, the standard error of its coefficient must be less than half
the coefficient,(i.e S.E b1 <b12). For the regression result we have;
GDP- 145.046- 0.093EXDS- 6.666PLR
S.E- (65.178),(0.222), (3.466)
Decision Rule
SE (b1) <b1/2 Accept H1
SE (b1) <b1/2 Accept H0
SE for b1 =0.222
b1/2=-0.093/2=-0.0465
0.222>-0.0465
And from our result, we therefore conclude that SE(b1)> b1/2 thus leading to the acceptance of our null
hypothesis (HO) alternative hypothesis (H1)
SE for b2=3.466
B2/2=-6.6662=-3.333
3.466>-3.333
And from our result, we therefore conclude that SE(b1/2) > b1/2 thus leading to the acceptance of our Null
hypothesis (HO) and the rejection of alternative Hypothesis(HI)
The student t-test measures the statistical significance of the coefficient of the explanatory variable in the
specified models inpendendently
The student t-test is at 5% level of significance. To obtain Tabulated, the degree of freedom (DF) has to be
ascertained.
DF=N-K
Where N=Number of years and K=Number of parameters Therefore we have
DF=30-3=27
According to the regression results, TCalculated : b1=-0.419
B2=-1.923
From the T distribution table, we Ttabulated = 2.052
Decision rule:
If Tcalculated < T tabulated Accept HO
If Tcalculated > Ttabulated Accept H1
B1:-0.419<2.052
From our result, we can therefore conclude that Tcalculated
< Ttabulated and the rejection of Alternative Hypothesis
(H1)
B2:-1.923<2.052
From our result, We can therefore conclude that Tcalculated <T tabulated and which leads to the acceptance of our
Null hypothesis (H0) and the rejection of Alternative Hypothesis(H1).
The test of 0ver all significance (f- test) measure the overall significance of the coefficients of the explanatory
variable in the specified model.
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Decision rule
If Fcalculated < F tabulated Accept H0
If F calculated Accept H1
From the result, the Fcal = 1.892 and to get the Ftab we check the F table using K- I degree of freedom
(numerator )and N-K degree of (denominator )
K-1: 3-1=2,
N-K=30-3=27
Therefore our F cal- 1.892< F tab=3.37, which leads to the rejection of the Alternative Hypothesis (H1)
and the acceptance of the Null Hypothesis (H0).
This means that, jointly, all the independence variable are statically insignificant in explaining the
variations in the dependent variable.
Thus, based on the above result, we can therefore conclude that external debt does not help the Nigeria
economy to grow in any way. This therefore lead to the acceptance of our null hypothesis (H0) which says:
External debt does not have a position impact on the Nigeria Economy.
V. SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
This paper considered the impact of external debt on Nigeria economy, relevant data concerning the
topic were gathered. The gathered data which was critically analysed was aimed at showing:
If external debt has an impact on Nigeria economy.
The extent to which external debt affects Nigeria economy through change in GDP.
Whether to accept null hypothesis (H0) or alterna6tive hypothesis (H1), Using the standard T- test, R2
and
standard error test.
The analysis reveled the following findings:
The model which is in line with the specific objective, the GDP was expressed as the independent variables
while (EXDS, PLR) were the independent variables.
The result show R2
to be 0.123. The interpretation is that 12.3% of the changes in GDP in Nigeria are
cause by EXDS and PLR. The remaining changes in GDP are explained by stochastic variable U.
The null hypothesis (H0) was subsequently accepted while (H1) was rejected based on the fact that T
calculated <T tabulated the value of R2
was relatively low (12.3%) and S.E (b1)>b1/2.
The result shows that external debt does not help Nigeria economy to any way.
VI. CONCLUSION
This paper empirically examines the relationship between external debt and Nigeria economy using
GDP. This is carried out using ordinary least square method.
It was discovered that the high and low level of external and internal factors. Worsen External debt
issue in Nigeria. The external factor include: impact of world oil price shocks, rising real interest terms,
declining term of trade and liberal landings policies of international commercial banks. The internal factor is
attributed to successive administrations macro economics policy errors.
External debt eats gradually into an economy and starts mounting pressure on the various sector of the
economy. Government should check its borrowing and ensure it is spending properly to help economic growth
and ensure proper payment plan and strict adherence to it.
VII. RECOMMENDATIONS
From the findings and conclusion above, this study provide the following recommendations for policy
for policy makers, government agencies and appropriate authority for improvement. Suggestion to be considered
includes the following:
Government should initiate and develop policies that will address the fundamental causes of external
debt.
There should be political will from government to ensure proper use of borrowings to develop all
sectors within the economy.
Proper debt payment plan should be formulated and strictly adhered to.
Government need to provide a model for public- private sector cooperation on develop human capital
development to enhance development to strengthen the economy.
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