The Impact of External Indebtedness on Poverty in Low-Income Countries
AbstractThis paper explores the relationship between external debt and poverty. A number of observers have argued that high external indebtedness is a major cause of poverty. Using the first-differenced general method of moments (GMM) estimator, the paper models the impact of external debt on poverty, measured by life expectancy, infant mortality, and gross primary enrollment rates, while duly taking into account the impact of external debt on income. The paper thus endeavors to bring together the literature that links external debt with income growth and poverty. The main conclusion is that once the effect of income on poverty has been taken into account, external indebtedness indicators have a limited but important impact on poverty.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 03/61.
Date of creation: 01 Mar 2003
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