External Debt and Economic Growth in Transition Countries: Case of Kyrgyzstan

Abstract

In many developing countries, out of shortage of savings and capital external resources as external debt, foreign direct investment and transfers play significant role in the fostering economic growth and development. The aim of this paper is to investigate the impacts of external public debt, current transfers and foreign direct investments on GDP of Kyrgyz Republic. By using quarterly data during 2000Q1-2017Q3 and the ARDL estimation method, the long-rum cointegration relationship between current transfers, external debt, FDI and GDP was found. According to the results, current transfers' contribution to the country's economy is more than government debts. It is suggested that the government should focus more on foreign direct investments than foreign debts and current transfers in the long term.

Global experience in public debt reduction (on example of Sweden, Switzerland, and Iceland)

“…The study of the Kyrgyz Republic's external debt was also conducted by J. Ganiev et al (2020), point to its significant recent growth. The researchers concluded that the country is dependent on foreign revenues, which led them to recommend that main recommendations were given as to how the Kyrgyz Republic can improve its current situation in terms of debt reduction.…”

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“…The study of the Kyrgyz Republic's external debt was also conducted by J. Ganiev et al (2020), point to its significant recent growth. The researchers concluded that the country is dependent on foreign revenues, which led them to recommend that main recommendations were given as to how the Kyrgyz Republic can improve its current situation in terms of debt reduction.…”