This study analyses the impact of public debt stock on economic growth in Nigeria. The study is designed to cover a period of twenty two years starting from 1985-2007. This time span is chosen in order to give a satisfactory empirical result on the Nigerian economy within the period.
The significance of this study is to show through findings the extent to which public debt has affected the level of economic growth and how effective the findings could be used to proffer solutions and recommendation towards fostering economic growth and development.
Furthermore, the study should serve as future prelude and reference for future researches on growth and public debt issues.
Statement of the problem
Public debt appears to be exerting negative implication on economic development of debtor countries as substantial part their budget expenditure is often set aside for debt servicing. Thus the issue of public debt and its servicing has attracted wide attention and generated heated debates in international political economy. And as earlier stated, there is no consensus among economists on whether government should borrow or not and its effectiveness in boosting economic growth and development.
Several factors have been advanced as reasons for the deteriorating African debt crisis. High among them was the oil price shock of the 1980s, misappropriation of public funds and worsening terms of trade.
The problem arising there of is what is the optimal level of debt that should be obtained by the government both internal and external.
However, this study will try to resolve some of the basic questions through theoretical and empirical verification. These questions include:
- The use of loan and public debts beneficial or detriment to growth?
- What are the implications of public debt on investment and the Nigerian economy?
- What are the Nigeria’s effort towards debt managing, rescheduling and cancellation?
Objective of the Study
The main objective of the study is to examine the extent to which public debt stimulate economic growth in Nigeria.
Other aims and objectives are:
- To assess the relationship between public debt stocks and public investment.
- To examine the genesis, trend, structure and magnitude of Nigeria’s public debt and it implication on the Nigeria
- To determine the causes of public debt, the management and sustainability and proffer recommendations based on the finding.
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