Revisiting the role of external debt in economic growth of developing countries
Revisiting the role of external debt in economic growth of developing countries
This paper proposes a study on the contribution of external debt to the expansion of economic growth for 31 developing countries. Over a period of 36 years, by using dynamic panel data econometrics estimation GMM-system, the results reveal that the accumulation of external debt is associated with a slowdown in the economies of the developing countries. In addition, this paper finds evidence that debt service ratio does not crowd out the investment rate in developing countries. In other words, even though external debt is negatively associated with economic growth, countries are found to be safe from being in the debt overhang hypothesis. Furthermore, there is evidence to support the existence of spatial dependence in the growth model, suggesting the existence of a positive spillover effect of growth among the neighbouring countries.
external debt, investment, economic growth, spatial econometrics, developing countries
968-993
Mohd Daud, Siti Nurazira
f58a5752-756d-4e60-ba8e-2419597aa418
Podivinsky, Jan M.
68b5a6e8-9d09-4a3e-97b2-4a9e4f1efbb9
4 October 2012
Mohd Daud, Siti Nurazira
f58a5752-756d-4e60-ba8e-2419597aa418
Podivinsky, Jan M.
68b5a6e8-9d09-4a3e-97b2-4a9e4f1efbb9
Mohd Daud, Siti Nurazira and Podivinsky, Jan M.
(2012)
Revisiting the role of external debt in economic growth of developing countries.
Journal of Business Economics and Management, 13 (5), .
(doi:10.3846/16111699.2012.701224).
Abstract
This paper proposes a study on the contribution of external debt to the expansion of economic growth for 31 developing countries. Over a period of 36 years, by using dynamic panel data econometrics estimation GMM-system, the results reveal that the accumulation of external debt is associated with a slowdown in the economies of the developing countries. In addition, this paper finds evidence that debt service ratio does not crowd out the investment rate in developing countries. In other words, even though external debt is negatively associated with economic growth, countries are found to be safe from being in the debt overhang hypothesis. Furthermore, there is evidence to support the existence of spatial dependence in the growth model, suggesting the existence of a positive spillover effect of growth among the neighbouring countries.
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Published date: 4 October 2012
Keywords:
external debt, investment, economic growth, spatial econometrics, developing countries
Organisations:
Economics
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Local EPrints ID: 343605
URI: http://eprints.soton.ac.uk/id/eprint/343605
ISSN: 1611-1699
PURE UUID: c8d5564d-2e30-47a2-8445-9e7e84422809
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Date deposited: 09 Oct 2012 09:30
Last modified: 15 Mar 2024 02:34
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Author:
Siti Nurazira Mohd Daud
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