On measuring indebtedness of African countries: A stochastic frontier debt production function
AbstractAt least since the early 1990s, the problem of Africa’s debt was a recurring theme in the development debate and many suggestions for debt relief have now been implemented. However, a thorough solution is hampered by the existence of multiple ways of scaling debt. This paper provides a framework for comprehensively measuring indebtedness and gives therefore a basis for setting objective principles for debt reduction measures. The paper uses a stochastic frontier production function approach and the technical efficiency computation procedure to develop an indebtedness index for 46 African countries. The results indicate an indebtedness index across countries ranging from a minimum of 3.6 (South-Africa) to a maximum of 92 (Zambia), with an average of 69. Countries, which have experienced extended civil wars, are generally less indebted, while countries with more corrupt governments have generally contracted more multilateral debt. The paper ends by raising a number of implications for a better approach of debt management in Africa.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 14661.
Date of creation: 2006
Date of revision:
External debt; Stochastic frontier; Indebtedness index; Institutions; African countries;
Find related papers by JEL classification:
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
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