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The Impact of Oil Export Earnings on Nigeria's External Debt

20 Pages Posted: 6 Feb 2010 Last revised: 23 Jan 2013

Sanusi Gbenga Peter

University of Ibadan - Department of Economics

Date Written: February 4, 2010


The study investigates the relationship between oil export earnings and Nigeria’s external debt. The intent is to empirically determine the relationship between external debt and oil revenue using the data from 1970 to 2006. The model which was econometrically estimated and simulated, found out that; there is empirical evidence to support the fact that oil export earnings has a positive relationship with the country’s external debt. Besides, external debt has affected Nigeria’s economic growth negatively. External reserve and trade openness shows an inverse relationship with external debt. The paper therefore concluded that, poor management of these two sources of revenue vis-à-vis, oil export earnings and external debt is the major problem over the period under investigation. The external debt crisis is symptomatic of a deeper domestic economic disequilibrium. To correct this, policies that instill fiscal discipline, elimination of corruption, political stability, diversification of the economy and reduction on oil dependence will help in promoting sustainable economic development.

Keywords: External Debt, Oil export earnings, Debt-Resource-Hypothesis, Economic growth, paradox of plenty

Suggested Citation

Peter, Sanusi Gbenga, The Impact of Oil Export Earnings on Nigeria's External Debt (February 4, 2010). USAEE Working Paper No. 10-038. Available at SSRN: or

Sanusi Gbenga Peter (Contact Author)

University of Ibadan - Department of Economics ( email )


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