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In addition most of the discussion has been centered on the relevance of debt cancellation to the ECOWAS Countries economy.

Given the above, the rational for the study is to examine, the economic specific implication of the external debt in ECOWAS Countries and to fill specific gap in the literature.

1.8 Structure of the Study

This study shall contain six chapters. The introductory chapter will be followed by chapter two which will give the brief historical background information of external debt, impact on external growth and development. This chapter will try to provide a theoretical basis for the study. Chapter three shall outline short economic history of ECOWAS and its debt crisis, where chapter four shall focus on the data and methodology to be adopted for the study. Chapter five shall present the results while chapter six will conclude by policy and with the appropriate recommendations.

LITERATURE REVIEW ON EXTERNAL DEBT AND GROWTH

2.1 Introduction

Economic development is the process of increasing the living standards of people within the boundaries of a specific location through the efficient and sustainable allocation of scarce resources (Kondonassis, A.J, 1991) .Conventionally, economic development can also be used to mean economic growth with structural change. This means that economic growth is a basic requirement for economic development. It should be noted, however, that while economic development concentrates on the transformation of economic structures and institutions, the study of economic growth emphasizes on the use of mathematical models that describes the quantitative relationships between economic variables. Academic studies on external debt related issues and its impacts on growth have only exploded after the debt crisis that hit many developing countries in the early 1980s. This chapter presents some relevant literature on growth and external indebtedness in developing countries.

2.2 Impact of External Debt on Growth and Development

The economic literature of recent times on open economies shows that rational levels of external borrowing by a developing country can improve its economic growth through capital accumulation and efficiency growth. This leads to faster convergence of per capita income between nations (Barro et al. 1995; Pattillo, Poison and Ricci, 2004). Most modern economies are virtually floating on credit. The accumulation of external debt is common phenomenon of developing countries at the stage of economic development where the supply of domestic savings is low, current account payment of deficit are high, and import of capital are needed to augment domestic resources (Michael, P.Todaro and Stephen C. Smith (2009) All these have made external borrowing a necessity.

2.3 Impact of External Debt, External Debt Service, Crowding Out on Growth

Cohen’s (1993) outcome on the correlation between investment Developing Countries debt in the 1980s showed that the stock of debt does not give full details the decelerate of investment in developing countries in the 1980s. It is the concrete flows of net transfers that matter. He establish that the real service of debt ‘crowded out’ investment.

Boyce and Ndikumana (2002) noted that debt burden forced Sub-Sahara African (SSA) countries to avert scarce resources from essential necessities. They furth