Foreign Aid, External Debt and Economic Growth Nexus in Low-Income Countries: The Role of Institutional Quality
AbstractInstitutional quality plays an important role in promoting economic development of a nation. Foreign capital can work efficiently and its productivity will be high if the quality of institution is good. This study attempts to investigate empirically the impact of external debt and foreign aid on economic growth by taking into consideration the quality of institution in terms of effective governance. Annual data for the period 1984 to 2010 has been taken from a panel of sixty developing countries. Empirical results indicate that the good governance and foreign aid affect the economic growth positively while that of external debt has a negative impact. These results are robust for various alternative specifications.
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Bibliographic InfoArticle provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.
Volume (Year): 51 (2012)
Issue (Month): 4 ()
Foreign Aid; External Debt; Economic Growth; Governance;
Find related papers by JEL classification:
- E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- F35 - International Economics - - International Finance - - - Foreign Aid
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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- Unbreen Qayyum & Hasan Siftain, 2014. "Governance and the Effectiveness of Foreign Capital," PIDE-Working Papers 2014:98, Pakistan Institute of Development Economics.
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