The Impact of External Debt on Economic Growth for Sub Saharan Africa
- Author
- Kamasha, Washington
- Title
- The Impact of External Debt on Economic Growth for Sub Saharan Africa
- Abstract
- Within scholarly as well as political community, there has been a discussion about the impact of foreign-debt upon economic-growth. The majority of SSA countries have endured significant rates of foreign debt as well as weak economic progress. It is notable that there has been opposing theories about how external debt affects economic growth. While many contend that foreign-debt slows growth because it discourages investments, others contend that foreign-debt is growth-enhancing. This research looked at how foreign-debt affected SSA's economic-growth from 2002 up to 2020. The research used Fixed Effect Model (FEM) for a collection of thirty SSA nations in order to achieve this goal. Dual-gap model served as a foundation for this theory. The findings from a panel estimating approach called the FEM demonstrate that the ratio of the foreign-debt stock to the gross domestic product have a statistically-significant adverse impact upon by 0.030%. This falls line with the idea that foreign-debt discourages investments, thus slowing down economic growth. A favorable correlation between growth, domestic investment and increase in population was also discovered. Nevertheless, it was shown that debt service payments and corruption (dummy variable) were not substantial factors in SSA's productivity expansion. From 2002 to 2020, it's possible that debt-overhang had been the primary factor that foreign debt used to harm SSA's economic-growth. According to this research, nations in SSA region should refrain from taking large loans in-order to prevent the negative effects of debt-overhang. The World Bank Database served as the primary source of information for this research's data.
- Date
- 2022
- Publisher
- BUSE
- Keywords
- economic growth
- Supervisor
- Nil
- Item sets
- Department of Economics
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