Open Research Journal of Economics and Finance Vol. 1, No. 1, May 2013, PP: 01 - 12 Avaiable online at http://acascipub.com/Journals.php 1 Research article External Borrowings and Economic Performance in Developing Nations: Empirical Evidence from Nigeria Eleje, Edward Ogbonnia (Ph.D) Accounting and Finance Department, Abuja School of Accountancy & Business Studies, Abuja FCT, Nigeria eddieelyg@yahoo.com Tel: 08030674738 / 08124840835 Ani Wilson (Ph.D) Banking and Finance Department, Micheal Okpara University of Agriculture, Umudike,Umuahia, Nigeria Tel: 08036660080 Ikenna Ezeudu (Ph.D) Banking and Finance Department, Micheal Okpara University of Agriculture, Umudike,Umuahia, Nigeria Tel: 08036716491 Abstract Development economists and other notable researchers are yet to come to terms on the roles of external debt finance in economic development. While some uphold that external debt is a credible desideratum for balanced growth and effective economic performance, others dismiss such position arguing that external borrowing rather triggers debt crisis which in turn could result in overall meltdown of an economy. Capturing the immediate past global economic crisis period, our study is an empirical contribution to these existing literature. The study utilized time series annualized data on Nigeria’s aggregate outstanding external debt, gross domestic product (GDP) at current basic price and gross fixed capital formation over a ten year period covering 2001-2010 to evaluate the impact of government external borrowings on economic performance in Nigeria. The study applied the computer-based linear regression approach using the current statistical package for social science (SPSS) version 17. Results show negative and significant effect of government external borrowings on GDP as well as gross fixed capital formation. Based on these findings, we concluded that government’s external debt is not favourable for Nigeria’s longrun economic performance. We therefore recommend amongst others that Nigerian government should reduce her financing expenditure using external debt. Instead, they should use more of domestic debt financing strategy since servicing external debt could be more expensive. Copyright © www.acascipub.com all rights reserved. Keywords: External Debt, Debt Crisis, Gross Fixed Investment, Economic Growth, GDP ______________________________________________