EXPLORING THE IMPACT OF EXTERNAL DEBT, FOREIGN DIRECT INVESTMENT, AND HUMAN CAPITAL DEVELOPMENT ON NIGERIA’S ECONOMIC GROWTH: A PATHWAY TO SUSTAINABLE ECONOMIC DEVELOPMENT

Abstract

An investigation into the impact of external borrowings, human capital development and foreign direct investment is considered timely for Nigerian economy, given the growing public debt profile amid deteriorating living standard of the populace. Using data from 1981 to 2023, the study estimates the influence of external debts, human capital development foreign direct investment, and gross fixed capital formation on Nigeria’s economic growth. The study employed the fully modified ordinary least squares (FMOLS) and canonical cointegration regression (CCR) as the main estimation technique and the robustness check respectively. The study discovered that external debt, foreign direct investment, and gross fixed capital formation exert negative influence, whereas, human capital development exhibits positive and statistically significant influence on economic growth in Nigeria. Premised on the findings, the study recommends that government should ensure comprehensive debt audits to prioritize servicing existing debts while reducing reliance on borrowing that diverts funds from development projects, and shift budgetary allocations from high-interest debt servicing to productive investment in social services and infrastructure that can stimulate economic growth.