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The Upshot of External Debt on Economic Growth in West African Countries: A Panel Data Approach

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  • Adeniji, Sesan
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    Abstract

    This study investigates the upshot of external debt on economic growth in West African countries using panel data techniques of analysis for a period of 1971 -2012. The aftermath of the analysis shows a negative and significant relationship between external debt and economic growth in the economies of the countries under consideration. This is in no way different from what economic theories preached and the outcome of some previous research work on the issue. Therefore, we suggest that government should endeavor to put-in necessary measure to ensure judicious use of fund obtain from abroad for the purpose which they are acquired considering the highest priority of the project and also develop effective and efficient external debt management strategies that will favour timely repayment or liquidation of the debt to avoid debt overhanging.

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    File URL: http://mpra.ub.uni-muenchen.de/52555/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 52555.

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    Date of creation: 29 Dec 2013
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    Handle: RePEc:pra:mprapa:52555

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    Keywords: Keywords: External Debt; Economic Growth and Panel data.;

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    1. Cohen, Daniel, 1993. "Low Investment and Large LDC Debt in the 1980's," American Economic Review, American Economic Association, vol. 83(3), pages 437-49, June.
    2. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
    3. Donogh C. McDonald, 1982. "Debt Capacity and Developing Country Borrowing: A Survey of the Literature (Capacité d'endettement et emprunts des pays en développement: aperçu des études consacrées à cette question)," IMF Staff Papers, Palgrave Macmillan, vol. 29(4), pages 603-646, December.
    4. Peter Hjertholm, 1999. "Analytical History of Heavily Indebted Poor Country (HIPC) Debt Sustainability Targets," Discussion Papers 00-03, University of Copenhagen. Department of Economics.
    5. Andrew M. Warner, 1991. "Did the debt crisis cause the investment crisis?," International Finance Discussion Papers 418, Board of Governors of the Federal Reserve System (U.S.).
    6. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    7. Schclarek, Alfredo, 2004. "Debt and Economic Growth in Developing and Industrial Countries," Working Papers 2005:34, Lund University, Department of Economics.
    8. Robert Solomon, 1977. "A Perspective on the Debt of Deveoloping Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 8(2), pages 479-510.
    9. Deshpande, Ashwini, 1997. "The debt overhang and the disincentive to invest," Journal of Development Economics, Elsevier, vol. 52(1), pages 169-187, February.
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