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Impact of Foreign Debt on Economic Growth: Evidence from Pakistan

Author

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  • Abdur Rauf
  • Amara Akram Khan

Abstract

This study analyzes the impact of foreign debt on economic growth of Pakistan, using annual time series data from1972 to 2013. The research question is tested through ARDL econometric framework and the estimated result shows that foreign debt exerts significant negative impact on economic growth which confirms the existences of debt overhang in Pakistan. Both physical and human capital has strong association with economic growth of Pakistan. The coefficient of Error Correction Term (ECT) suggested that any deviation from the long term inequality is corrected by a moderate speed over each year. Significant ECT is further proof of the existence of stable long run relationship. It can be suggested that the proper management of debt may help the government in attaining the desirable growth of the economy.

Suggested Citation

  • Abdur Rauf & Amara Akram Khan, 2017. "Impact of Foreign Debt on Economic Growth: Evidence from Pakistan," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 7(10), pages 1005-1013.
    • Handle: RePEc:asi:aeafrj:v:7:y:2017:i:10:p:1005-1013:id:1613
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    Cited by:

    1. Subrata Deb Nath & Md. Rezaul Karim & Faruk Hossain & Mohammed Main Uddin, 2023. "Impact of External Public Debt on Economic Growth: A Case Study of Bangladesh," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 14(3), pages 01-08, September.
    2. Nabila Khurshid & Hamza Sharif & Mosab I. Tabash & Basem Hamouri & Asma Fiaz & Fozia Munir, 2023. "Analyzing the Impact of Foreign Capital Inflows and Political Economy on Economic Growth: An Application of Regime Switching Model," Economies, MDPI, vol. 11(7), pages 1-17, June.

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