Economic Globalization and Public Debt in Nigeria

Abstract

This study investigated the relationship between globalization and public debt in Nigeria. With data from 1981 to 2022, Fully Modified OLS (FMOLS), Dynamic OLS (DOLS) and Canonical Cointegration Regression (CCR) estimation techniques were employed. Three different models were estimated. Across all three models, the results showed that there is a significant positive relationship between public debt and economic globalization in Nigeria. A one unit increase in globalization translates to a 26% jump in Nigeria’s public debt. The implication of this finding is that while Nigeria embraces global economic integration, a lot of caution must be observed because it comes at a huge cost to the nation. The cost to Nigeria is a high public debt burden. Already, the country is struggling to ensure that her public debts are sustainable and so we must not add too much pressure to our debt burden.  This study recommends that the Nigerian government must undertake careful analysis of the various trade and financial globalization partnerships and agreements before signing any. It is important that we strike a balance between integrating into the global economy and maintaining sustainable public debt levels. The consequence of not doing this is that all gains made in the name of globalization could be eroded by high public debt repayment.