ABSTRACT

This study empirically investigates the nexus between external debt and economic development of some selected West African States over a period 2015 to 2020. Human Development Index (HDI) - the dependent variable was regressed on four explanatory variables: External debt, external debt servicing, trade openness and foreign direct investment. 

Employing panel least squares regression techniques, the empirical findings shows that external debt financing, external debt servicing, and foreign direct investment had a positive and significant relationship with economic development of West African States while trade openness have an insignificant positive relationship with Economic Development.

In view of the foregoing empirical findings, it is recommended that: the total external debt incurred should be channeled towards the purpose meant for its existence; the form of the debt owed to foreign governments should be determined by the lowest interest rate that will be applied to repaying that loan; it is important to identify additional foreign debt difficulties for economic analysis purposes; and the debt management department's goal should be to offer sound financial counsel about the acquisition and deployment of various types of external loans.