A Critical Review of External Debt and Economic Growth Relationship: A Lesson for Indebtedness Countries
AbstractThe purpose of this paper is to review existing empirical studies of external debt and economic growth relationship. The decline in investment and growth performance of the highly indebted countries in the past three decades is frequently attributed, at least to some extent, to the burden of their foreign debt, a phenomenon which has been recognised as debt overhang. Empirical results indicate that it is difficult to say whether external debt has a negative or positive effect on economic growth. It is also improper to make any type of generalizations of the potential relationship between economic growth and external debt. Thus, it is necessary to consider the case of each country separately.
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Bibliographic InfoArticle provided by Ege University Faculty of Economics and Administrative Sciences in its journal Ege Academic Review.
Volume (Year): 4 (2004)
Issue (Month): 1 ()
Find related papers by JEL classification:
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
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- Deshpande, Ashwini, 1997. "The debt overhang and the disincentive to invest," Journal of Development Economics, Elsevier, vol. 52(1), pages 169-187, February.
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- Bert Hofman & Helmut Reisen, 1991. "Some evidence on debt-related determinants of investment and consumption in heavily indebted countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 127(2), pages 281-299, June.
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- Rockerbie, Duane W., 1993. "Credit rationing and macroeconomic adjustment in Latin America," The Quarterly Review of Economics and Finance, Elsevier, vol. 33(4), pages 325-342.
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