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Rivers State University, Port Harcourt.
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| Title: | External Debt and Real Sector Performance in Nigeria |
| Author(s): | Lewis Dormaa GBARAYORKS, James Docmagnus ENEBELI & Emmanuel OKEME |
| Abstract: | This study investigates the relationship between external debt, government capital expenditure, real exchange rate, and real sector performance in the Nigerian economy. The study used the Error Correction Mechanism (ECM) model and the Autoregressive Distributed Lag (ARDL) approach. The results showed that in the short-run, the real sectors’ growth, proxy by Real Gross Domestic Product (RGDP), is not significantly influenced by its past performance (lagged LRGDP). However, there is a strong long-run adjustment mechanism, indicating the economy's tendency to converge to its equilibrium growth path over time. Changes in external debt showed a non-significant short-term impact on the real sector, emphasizing the need for prudent debt management and productive utilization of borrowed funds. Government capital expenditure significantly affects the real sector in the short-run, underscoring the importance of targeted and efficient public investments. The real exchange rate plays a crucial role in short-term economic performance, highlighting the necessity of maintaining a stable and competitive exchange rate to support economic activities. The study recommends that; policymakers should prioritize capital expenditure and same should be directed into productive use, enhance debt management practices, and maintain exchange rate stability to foster sustainable economic growth and development in Nigeria. |
| Keywords: | Real Sector, External Debt, Government Capital Budget, Real Exchange Rate, Nigeria |
| Journal: | Economic and Social Science Review (ESR) |
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