Abstract
This study examined whether foreign debts have been able to improve or otherwise Nigeria’s economy towards improving the living standard of her citizenry with respect to the nation’s gross domestic product (GDP), USD exchange rate, inflation rate and foreign direct investment (FDI) for the period 1986 to 2017. The study was carried out in Nigeria with respect to other countries doing business with Nigeria. The study also made use of secondary data for the period under consideration. Data obtained were subjected to the cointegration test, which results show that the F-statistic is greater than the lower and upper bound critical value at a five per cent (5%) significance level. Thus, the null hypothesis of no long-run relationship is rejected at a five per cent (5%) significance level. It can, therefore, be inferred that the variables are cointegrated holding the external debt profile as the independent variable. Furthermore, the Ordinary Least Square Linear Multiple Regression Analyses (OLSLMRA) revealed that foreign debt significantly affected adversely, the nation’s gross domestic product (GDP), USD exchange rate and foreign direct investment; except for inflation rate. The study, therefore, concluded that foreign debts, though not the best option for countries striving to survive; still have a significant effect on Nigeria’s economy and indeed her living standard. The study recommends diversification of Nigeria’s economy outside the crude oil to include agriculture, solid minerals, manufacturing, trade and industry to improve on her gross domestic product (GDP), exchange rate, inflation rate and foreign direct investment (FDI) and thus better the living standard of her citizenry.
Highlights
For developing nations, the normal route to better living standards according to their leaders is usually foreign debts which are normally readily available from such willing institutions such as the Paris Club and International Monetary Fund (IMF) among others
This study examined whether foreign debts have been able to improve or otherwise Nigeria’s economy towards improving the living standard of her citizenry with respect to the nation’s gross domestic product (GDP), USD exchange rate, inflation rate and foreign direct investment (FDI) for the period 1986 to 2017
Ashram and Chaudhary (20018) while referring to Pakistan notes that the consequences of higher foreign debts been characterised by low gross domestic product (GDP) and foreign direct investment (FDI) as well as higher USD exchange rate and inflation rate
Summary
The normal route to better living standards according to their leaders is usually foreign debts which are normally readily available from such willing institutions such as the Paris Club and International Monetary Fund (IMF) among others. The issue at stake is that any time Nigeria was borrowing, the usual reason is always pinned down to economic development and improved standard of living, but realistically things seem to be getting rather worse in terms of the nations’ gross domestic product (GDP) status, USD Exchange rate, inflation rate and foreign direct investment (FDI) among others. This study seeks to investigate why continuous external borrowing by various Nigerian regimes (leaders) could not guarantee such development needs and improve the living standard of Nigerian citizens with respect to gross domestic product (GDP) status, USD Exchange rate, inflation rate and foreign direct investment (FDI). H04: Foreign Debts do not Significantly influence Foreign Direct Investment (FDI) in Nigeria
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