Description
Title: Investigating the Links Between External Debt and Economic Growth: Evidence from Sub-Saharan Africa
Abstract: The purpose of this study was to identify the channels by which external debt impacts economic growth in sub-Saharan African (SSA) nations. In order to achieve this, panel data from 30 SSA countries were examined for the years 1985–2019 using the generalized method of moments (GMM) estimation method. According to the study, the non-linear relationship between external debt and economic growth is transmitted through channels including public investment, private investment, and total factor productivity. In addition, the confirmation of the interest rate as a channel with a direct impact was made. On the other hand, the estimates showed that savings do not act as a conduit for the transmission of external debt to economic growth in SSA. These findings demand that SSA countries take immediate steps to cut their external debt stocks and implement alternative macroeconomic non-debt strategies to strengthen the channels that have been identified as being negatively impacted by high external debt.
Keywords: The purpose of this study was to identify the channels by which external debt impacts economic growth in sub-Saharan African (SSA) nations. In order to achieve this, panel data from 30 SSA countries were examined for the years 1985–2019 using the generalized method of moments (GMM) estimation method. According to the study, the non-linear relationship between external debt and economic growth is transmitted through channels including public investment, private investment, and total factor productivity. In addition, the confirmation of the interest rate as a channel with a direct impact was made. On the other hand, the estimates showed that savings do not act as a conduit for the transmission of external debt to economic growth in SSA. These findings demand that SSA countries take immediate steps to cut their external debt stocks and implement alternative macroeconomic non-debt strategies to strengthen the channels that have been identified as being negatively impacted by high external debt.
Paper Quality: SCOPUS / Web of Science Level Research Paper
Subject: Economics
Writer Experience: 20+ Years
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