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

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  • Siddique, Abu
  • Selvanathan, E.A.
  • Selvanathan, Saroja

Abstract

During the 1970's and 1980's, the external debt of poor countries rose to a level constituting a ‘debt crisis’. The main source of external debt was the surplus revenue generated by significant increases in the price of oil during the 1970s. Unfortunately, many of the countries failed to use the external debt wisely and prudently. When the revenue from oil sales started to decline due to low oil prices during the 1980s, heavily indebted poor countries (HIPCs) experienced difficulty servicing the debt. Using HIPCs data, this paper analyses the extent to which the external debt burden impacts on a country's GDP.

Suggested Citation

  • Siddique, Abu & Selvanathan, E.A. & Selvanathan, Saroja, 2016. "The impact of external debt on growth: Evidence from highly indebted poor countries," Journal of Policy Modeling, Elsevier, vol. 38(5), pages 874-894.
    • Handle: RePEc:eee:jpolmo:v:38:y:2016:i:5:p:874-894
    DOI: 10.1016/j.jpolmod.2016.03.011
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    More about this item

    Keywords

    External debt; Economic growth; Highly indebted poor countries; Debt relief;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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