The impact of external debt on growth: Evidence from highly indebted poor countries

Siddique, Abu; Selvanathan, Eliyathamby A.; Selvanathan, Saroja

doi:10.1016/j.jpolmod.2016.03.011

Cited by 79 publications

(70 citation statements)

References 31 publications

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“…Meanwhile, Table 5 shows that total external debt stock and external debt service have some mild, negative and statistically significant long term relationships. This has gone to confirm the findings of Adegbite, Ayadi, and Ayadi (2008) and Siddique, Selvanathan, and Selvanathan (2015). The impact of savings on capital formation has been established to be positive in the long run with a coefficient of 0.174 and p-value of 0.006 depicting a very strong statistical significance.…”

supporting

confidence: 79%

Analyzing the Impact of External Debt on Capital Formation in Nigeria: An Autoregressive Distributed Lag Approach

Abdullahi¹,

Hassan

Bakar³

2015

MJSS

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supporting

confidence: 79%

Analyzing the Impact of External Debt on Capital Formation in Nigeria: An Autoregressive Distributed Lag Approach

Abdullahi¹,

Hassan

Bakar³

2015

MJSS

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“…Furthermore, they found that the income per capita dummy is not significant, which implies that being a rich or poor SSA does not change the narrative that external debt hampers economic growth. Siddique et al (2015) using panel data revealed that there exists short and long-run causality running from external debt service to GDP for the period of 1970-2007 for the heavily indebted poor (HIPC) countries. Atique and Malik (2012) estimated the impact of domestic and external debt on economic growth in Pakistan from 1980 to 2010 using ordinary least squares estimator.…”

Section: Related Empirical Literaturementioning

confidence: 99%

External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries

Asafo

2019

International Journal of Business, Economics and Management

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This paper examines external debt and economic growth relationship in a panel of 48 Sub-Saharan Africa countries (SSA) for the period 1990-2017 using a two-step system General Method of Moments (GMM) technique. Our study shows that contemporaneously, external debt has a negative and statistically significant impact on GDP growth. However, the first lag of external debt variables stimulates GDP growth. The implication is that external debt accumulated in the previous period makes funds available for growth enhancing expenditure in the next period. Furthermore, our study found no evidence of a non-linear relationship between debt and economic growth. Lastly, we found that the deleterious impact of external debt on GDP growth does not preclude poor or rich SSA countries. We recommend the adoption of state-of-the-art measures in collecting domestic revenue to complement external revenue sources. In addition, we advocate for strong macroeconomic environment in SSA so that yield negotiation on the debt will not dissipate the coffers of SSA countries via high debt servicing cost. Contribution/Originality: This study uses new estimation methodology to unravel the external debt and economic growth nexus in Sub-Saharan Africa countries. 1. INTRODUCTION Sustainable economic growth and development is the main concern for all economies worldwide , especially Sub-Saharan Africa (SSA) 1 countries that happen to find themselves at the lower end of the growth chart. The quest to achieve these goals of economic growth and sustainable development calls for huge outlays which invariably comes from external sources with high servicing cost which perhaps, has plunged SSA into an uncomfortable fiscal position. Researchers like (Eaton, 1993) argues that external debt complements domestic savings and investment, hence it enhances growth. Of different opinion is Krugman (1988) who posits that debt servicing causes disruptions in an economy, hence it discourages investment and economic growth. The impact of the global economic downturn in the mid-1980s on developing economies, including the debt crisis, was such that the 1980s is often referred to as the lost decade for Africa (Iyoha, 1999). The debt burden on SSA after the lost decade has stagnated many of its economies which led to the adoption of SAPS 2 aimed at reducing the SSA fiscal imbalances. However, the pace of 1 According to the United Nations, Sub-Saharan Africa countries are all African countries who are fully or partially located south of the Sahara.

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“…On the other side, to improve the human capital capacity will expand innovation activities which led to higher economic growth (Benecke, 2008). It is necessary due to developing countries are often use debt to operate their economy and when debt becomes a part of GDP, it gives negatives impact both in short and long run (Siddique et al, 2016).…”

Section: Development Modelmentioning

confidence: 99%

What We Talk About When We Talk About Development? A Review

Raeskyesa

2019

JIME

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The purpose of this research is to revisit the meaning of development by seeking to answer the question; what is development? Also, we question whether the common and old wisdom of development objectives, economic growth (GDP), should continue to be the focus of studies. It concludes that development is when human aspects are become the objectives Abstrak Tujuan dari penelitian ini adalah untuk meninjau kembali makna pembangunan dengan berusaha menjawab pertanyaan; apa itu pembangunan?Kami juga mempertanyakan apakah pemahanan umum dari tujuan pembangunan yaitu Produk Domestik Bruto (PDB), harus terus menjadi fokus studi. Disimpulkan bahwa pembangunan adalah ketika aspek manusia menjadi tujuan Kata Kunci: Pembangunan Ekonomi, Pertumbuhan Ekonomi, Pembangunan SDM

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The impact of external debt on growth: Evidence from highly indebted poor countries

Cited by 79 publications

References 31 publications

Analyzing the Impact of External Debt on Capital Formation in Nigeria: An Autoregressive Distributed Lag Approach

Analyzing the Impact of External Debt on Capital Formation in Nigeria: An Autoregressive Distributed Lag Approach

External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries

What We Talk About When We Talk About Development? A Review

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