Analysing External Debt Impact on Human Capital Development in Nigeria

Abstract

Underdeveloped economies like Nigeria have always battled with human capital and economic development challenges orchestrated by poor and insufficient capital to embark on investment purposes. We know that economists have always supported that investment for production trigger economic activities leading to massive developments. This desire for economic developments have over the years triggered persistent scramble for foreign or international capital by underdeveloped economies and this has remained very contemporary. It therefore becomes imperative to analyse the impact that international capital has on human capital development of underdeveloped economies like Nigeria, with emphasis on External debt which is noted to be the commonest form and most favoured form of international capital for underdeveloped economies. Various studies that attempted to analyse the nexus came up with conflicting and or mixed findings. This study aims at disaggregating the impact of external debt on human capital development. The researcher has proxied ED with External debt stock (EDSK), External debt servicing (EDS), Exchange rate (EXR), Interest rate (ITR) and Inflation rate (IFR). The main objective of this study is to analyse the effect ED on human capital development (HCD) in Nigeria. The specific objectives are to explore, determine, assess, examine and ascertain the effect of EDSK, EDS, EXR, ITR and IFR on HCD. The study adopted ex-post facto research design and sourced data from the Central Bank of Nigeria Statistical Bulletin and Annual Reports and the World Bank Development Indicators were analyzed using Descriptive Statistics, Augmented Dicker Fuller tests for unit roots and Autoregressive Distributive Lag (ARDL) for the hypothesis. The study found no long run effect of ED on HCD in Nigeria but the existence of a positive and significant short run effect on HCD in Nigeria. It is recommended that External debt should be contracted solely for short term in