Domestic Investment, External Debt and Economic Growth: Cointegration and Causality Evidence From Nigeria

Adamu, Ibrahim Mohammed; Rasiah, Rajah

doi:10.37134/jcit.vol7.1.2017

Cited by 4 publications

(3 citation statements)

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“…This considerably reduced the external debt from US$36.6 billion in 2004 to US$3.7 billion by 2006 as shown in Figure 1. Recently, there have been concerns about the rapid increase of external debt and its implications for the future growth and development, as the government resumes further borrowing reaching to about US$18.9 Billion in 2017 (Adamu and Rasiah, 2017).…”

Section: Nigeria's External Debt Profilementioning

confidence: 99%

“…External borrowing has been a major source of financial resources for developing countries to fill deficits gap between national savings and domestic investment. This means that the financial intermediations between the developing countries and the export credit agencies have improved the transfer of resources for future growth and sustainable development (Adamu and Rasiah, 2017;Adamu, 2016). For example, in the early period of independence, Nigerian economy was free from external shocks, and domestic economic policy responses were adjustable.…”

Section: Introductionmentioning

confidence: 99%

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Re-visiting the Drivers for Increasing External Debt

Adamu

2019

JCIT

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This paper investigates the drives for increasing external debt in an open economy Nigeria over the period 1970 to 2017 using general to specific approach (GETS) approach (Hendry, 1995). The Johansen cointegration test confirms that variables have long run relationship. The empirical results for both long run and short run estimates indicate oil price, domestic savings and fiscal deficits play a significant role in increasing external debt in Nigeria. The study also found evidence that the dummy variables for exchange rate and debt relief also accelerate the growth of external. This finding indicates that, after the multilateral debt relief between 2005 and 2006, fresh loans are still coming to Nigeria. To this end, Nigeria should focus on investment in real sectors especially in agriculture and manufacturing to increase export performance. This would enable the country to generate adequate foreign earnings and stimulate domestic savings, and reduce reliance on oil revenue.

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Section: Nigeria's External Debt Profilementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Re-visiting the Drivers for Increasing External Debt

Adamu

2019

JCIT

Self Cite

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“…The third group of studies consists of those that found insignificant or mixed results regarding the effect of savings on growth (Joshi, Pradhan & Bist 2019;Miah & Majumder 2020;Patra et al 2017;Yadav, Goyani & Mishra 2018). Among this group of studies, Bolarinwa and Obembe (2017) focussed on six African countries and found that saving had negative impact on growth in Burkina Faso and Niger, but positive impact for Nigeria.…”

Section: Literature Reviewmentioning

confidence: 99%

Savings and growth nexus in the context of Southern African Customs Union countries

Tala,

Anyikwa,

le Roux

2024

Journal of Economic and Financial Sciences

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Orientation: The primary goal of Southern African Customs Union (SACU) is to promote economic development through regional coordination. Consequently, SACU members have set economic growth targets through various medium- and long-term policies.Research purpose: The article investigates the savings-growth nexus among SACU countries.Motivation for the study: This study is motivated by low economic growth among SACU countries and the gap in the saving-growth literature. Specifically, previous studies assumed linear relationship, thereby ignoring the fact that savings may be related to economic growth in a nonlinear fashion.Research approach/design and method: The study utilised several panel estimation techniques with data over 1990–2021 for the SACU countries.Main findings: Firstly, there is a strong evidence of long run relationship between saving and economic growth in SACU countries. Secondly, domestic saving exhibits a positive and statistically significant effect on economic growth both in the short-and long-term. Thirdly, there is evidence of non-linear relationship between domestic saving and economic growth. Lastly, it is shown that 16% threshold level of domestic savings to gross domestic product (GDP) ratio is consistent with 6% GDP growth target aspired by SACU union.Practical/managerial implications: The findings of this article suggest that domestic saving is a prerequisite for economic growth provided the funds are channelled to productive investments. Consequently, there is a need to design appropriate policies that can help to promote and mobilise savings.Contribution/value-add: This article contributes to the ongoing debate on saving-growth in the context of developing countries. In addition, it addressed the linearity assumption of the previous studies by incorporating nonlinear assumption.

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