ABSTRACT

The main aim of this study is to examine the Impact ofExternal Debt, Foreign aid on Economic Growth in Nigeria. Developing countries of the world are regarded as being poor not because they don l have the resources but because bulk of their resources (income) are being channeled to meeting the consumption needs of their people with little or nothing left for savings. Hence low savings rate brings about low investments rate and low investments rate results to low growth rate, developing countries are left with no option than to result to external borrowings andforeign assistance (foreign aid) to bridge the saving- investment gap with the intention to achieving economic growth and poverty reduction. The aim of this research project was to analyze the impact ofexternal borrowing, foreign aid on the economic growth ofNigeria 1980 and 2017. Specifically, the study examined the effect External Debt stock (EDS), External Debt Service Payments (DSP) andforeign aid (FAID) on the economic growth ofNigeria. Following a detailed time series analysis which involved the use of ordinary least square estimation technique, the empirical result. There is the needfor government to reduce the growing size of external debts since the empirical finding from our study provided evidence that the cost of servicing these debts impacted negatively on Nigeria’s economic growth. Consequently government should endeavor to live within its means and ifit must borrow then it should lookfor alternative means offinancing its deficits. For instance government can borrowfundsfrom other sectors ofthe economy through selling and issuing ofgovernment bonds and securities.