Foreign debt and economic growth

Lin, Shuanglin; Sosin, Kim

doi:10.1111/1468-0351.00092

Cited by 50 publications

(30 citation statements)

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“…Most of the studies, e.g., Sachs (1990), Levy and Chowdhury (1993), Cunningham (1993), Fosu (1996Fosu ( , 1999, Cohen (1996), Chowdhury (2001), Lin and Sosin (2001) and Akram (2011), find a negative relationship between external debt and economic growth. On the other hand, the studies based on the overlapping generation models suggest that gains and losses of the external debt are unequally distributed and most of the benefits of growth go to the future generations while the costs are borne by the existing generation (Dellas & Galor, 1992).…”

Section: Literature Reviewmentioning

confidence: 99%

Public debt and pro-poor economic growth evidence from South Asian countries

Akram¹

2016

Economic Research-Ekonomska Istraživanja

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Over the years, most developing countries have failed to collect enough revenues to finance their budgets. As a result, they face the problem of twin deficits and are relying on public external and domestic debt to finance their developmental activities. NGOs and anti-globalisation movements have propagated the view that instead of reducing poverty public debt has increased the miseries of the poor. The current study examines the consequences of public debt for economic growth and poverty regarding selected South Asian countries, i.e., Bangladesh, India, Pakistan and Sri Lanka, for the period 1975-2010. It develops an empirical model that incorporates the role of public debt into growth equations and the model is extended to incorporate the effects of debt on poverty. The model is estimated by using standard panel data estimation methodologies. The results shows that although public debt has a negative impact on economic growth, neither public external debt nor external debt servicing has a significant relationship with income inequality, suggesting that public external debt is as good/bad for poor as it is for rich. However, domestic debt has a positive relationship with economic growth and a negative relationship with the GINI coefficient, indicating that domestic debt is pro-poor.

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Section: Literature Reviewmentioning

confidence: 99%

Public debt and pro-poor economic growth evidence from South Asian countries

Akram¹

2016

Economic Research-Ekonomska Istraživanja

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“…Pattillo et al (2002) state that a high external debt service will discourage domestic and foreign investments. This is because, in order to pay the principal amount and interest payment, future tax revenue needs to rise or the given tax revenue must be diverted from other productive uses, which may hurt economic growth (Lin and Sosin, 2001). This means high that levels of debt burden squeeze investments because the returns are discounted through the debt service payment by creditors.…”

Section: Regression Analysismentioning

confidence: 99%

Public Debt and Economic Growth in Malaysia

Lee

2015

Asian Economic and Financial Review

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Public debt in the Malaysia increased because of fiscal expansions. This study examines whether public debt contributed to the economic growth in Contribution/ OriginalityOur paper aims at contributing to the debate on the relationship between public debt and economic growth. To the best of our knowledge, only a few and inconclusive studies focus on external debt for Malaysia's economic growth. It may be worthwhile to examine the impact of public debt on the economic in Malaysia to provide out-of-sample evidence in related works. The results of this study would be an important input to local policy makers concerning the role in monitoring public debt position.

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“…The origin of this crisis stems from the accumulated external debt stock and its sustainability problem, particularly in highly indebted poor countries (HIPCs) (Gunter, ; Easterly, ). For the majority of these countries, the debt crisis was a lost decade, recording low or negative growth rates per capita GDP (Sachs, ; Lin and Sosin, ). Since then, several empirical studies have assessed the impact of external debt and its sustainability on economic growth.…”

Section: Introductionmentioning

confidence: 99%

External Debt and Growth Dynamics in Nigeria

Adamu¹,

Rasiah²

2016

African Development Review

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This paper investigates the dynamic effects of external debt on economic growth in Nigeria from 1970 through 2013. We begin by constructing an external debt sustainability index using principal component analysis to capture the overall effects of external debt indicators on economic growth. The empirical analysis is based on the ARDL bound test. The results show a long‐run cointegration relationship between the variables. While external debt exerts an adverse effect of −0.069 per cent on growth in the long run, the external debt sustainability index shows a positive effect of 0.072 per cent and 0.024 per cent on growth in the long and short run. The findings suggest the government should reduce its expenditure and mobilize revenue through domestic sources to invest in projects with a high rate of return to enable debt repayment and stimulate growth. To maintain debt ratios within a manageable threshold so as to avoid being debt trapped, foreign loans should only be contracted on concessional terms.

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Foreign debt and economic growth

Cited by 50 publications

References 0 publications

Public debt and pro-poor economic growth evidence from South Asian countries

Public debt and pro-poor economic growth evidence from South Asian countries

Public Debt and Economic Growth in Malaysia

External Debt and Growth Dynamics in Nigeria

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