Abstract Based on data from 14 Highly Indebted Poor African Countries that received debt relief during the decade 1990-2001 (relief decade) the study examines whether this relief was followed by significant improvements in the countries’ development in subsequent years (2000-2004). Using a comparative and econometric approach this paper found that the countries which received the highest relief actually experienced a reduction in their per capita income in subsequent years where as improvements in growth in some of the countries was not necessarily caused by the relief. The paper also shows that real GDP per capita growth rates declined in the largest relief recipient. Another finding of this paper is that those countries with the lowest share in the debt relief showed some improvements which suggests that a significant increase in per capita income could occur without the provision of great debt relief to a HIPC. In addition, even if the freed resources were used for social services such as schooling and health care this had little developmental effects indicating that the resources were not properly directed to productive activities. Thus this paper emphasizes that debt relief is not a sufficient condition for having growth. Debt relief could be correlated with growth but evidences for causation are scant. The research presents evidence that debt relief by itself did not bring about growth in the sub-Saharan sub-continent as doubling amounts of debt relief was followed declining growth rates.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
9955.
Find related papers by JEL classification: P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Linkages F34 - International Economics - - International Finance - - - International Lending and Debt Problems F30 - International Economics - - International Finance - - - General
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