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External debt, trade and FDI on economic growth of least developed countries

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  • Wamboye, Evelyn

Abstract

This study evaluates the impact of public external debt on long term economic growth of forty least developed countries (LDCs). Arellano-Bond SGMM method is used on unbalanced panel data spanning from 1975 to 2010. A comparative analysis based on different debt specifications and samples is provided. Overall, our findings suggest that high external debt depresses economic growth, regardless of the nature of the debt. Furthermore, debt relief initiatives are crucial as evidenced in the lower negative debt effects on growth in HIPCs sub-sample relative to non-HIPCs. Additionally, trade, initial values of FDI and ODA matter in economic growth of LDCs.

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  • Wamboye, Evelyn, 2012. "External debt, trade and FDI on economic growth of least developed countries," MPRA Paper 39031, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:39031
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    2. Muhammed BENLI, 2020. "The effect of external debt on long run economic growth in developing economies: Evidence from heterogeneous panel data models with cross sectional dependency," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(624), A), pages 127-138, Autumn.

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    More about this item

    Keywords

    LDCs; External Debt; Economic Growth; HIPCs;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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