IDEAS home Printed from https://ideas.repec.org/a/ids/ijepee/v19y2024i1p1-14.html
   My bibliography  Save this article

The impact of external debt on economic growth in emerging economies: investigating the role of capital formation

Author

Listed:
  • Nisha Prakash
  • Swarupa Ranjan Panigrahi

Abstract

The emerging economies rely on external debt for their economic development (Hawkins and Turner, 2000). We investigate capital formation as one of the channels through which external debt impacts the economic growth of emerging economies. The study utilises unbalanced panel data estimation models on economic data of 24 emerging economies1 for the period 1990 to 2019. Unbalanced panel data regression models are developed to identify the impact of: 1) growth of external debt stock (EDS) on GDP growth; 2) capital formation growth on GDP growth; 3) growth of EDS on capital formation growth in these economies. The findings indicate that EDS growth in the emerging economies had a negative impact on GDP growth, while capital formation growth had a significant positive impact on GDP growth. Further, the EDS growth had a significant negative impact on capital formation. Findings indicate that the debt raised has hindered capital formation in emerging economies.

Suggested Citation

  • Nisha Prakash & Swarupa Ranjan Panigrahi, 2024. "The impact of external debt on economic growth in emerging economies: investigating the role of capital formation," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 19(1), pages 1-14.
    • Handle: RePEc:ids:ijepee:v:19:y:2024:i:1:p:1-14
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=137944
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijepee:v:19:y:2024:i:1:p:1-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=219 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.