IDEAS home Printed from https://ideas.repec.org/a/bjc/journl/v8y2021i3p144-154.html
   My bibliography  Save this article

Effect of Total Debt Service, Capital stock and Inflationon Economic Growth in SSA: Difference GMM Analysis

Author

Listed:
  • Wycliffe Mugun

    (Department of Economics, Kaimosi Friends University College, Kenya)

Abstract

Over the past decades, the 1980s to mid-2005 rising debt levels raised concerns for many developing Nations. This was evidenced by the High Indebted Poor Countries Initiativean emblem of African countries struggle to tackle the debt problem. However, owing to the fact that there are limited studies on total debt service, various studies indicate divergent views on the effect of total debt service on economic growth. For this reason, it is not clear whether or not total debt service affect economic growth in Sub-Saharan Africa. The main objective of this study was to investigate the effect of total debt service on economic growth in Sub-Saharan Africa. The random effect model results indicated that total debt service had positive and statistically significant relationship with economic growth in SSA. One step difference Generalized Method of Moments results showed that total debt service had a positive and insignificant relationship with economic growth, capital stock had positive and statistically significant effect on economic growth in SSAwhile inflation had positive and statistically insignificant relationship with economic growth. The study recommends that SSA countries should exhibit restrain in contracting new external debt since total debt servicing was associated with decline in economic growth and also the governments should establish and adopt an optimal balance between external and domestic debt to maintain steady economic growth. The study concluded that SSA to actively engage in international trade since it facilitates technology transfer, exchange of information and opportunities to realize economies of scale and high volume of investment.

Suggested Citation

  • Wycliffe Mugun, 2021. "Effect of Total Debt Service, Capital stock and Inflationon Economic Growth in SSA: Difference GMM Analysis," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 8(3), pages 144-154, March.
    • Handle: RePEc:bjc:journl:v:8:y:2021:i:3:p:144-154
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijrsi/digital-library/volume-8-issue-3/144-154.pdf
    Download Restriction: no
    File URL: https://www.rsisinternational.org/virtual-library/papers/effect-of-total-debt-service-capital-stock-and-inflation-on-economic-growth-in-ssa-difference-gmm-analysis/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bichaka Fayissa & Christian Nsiah, 2010. "The Impact of Remittances on Economic Growth and Development in Africa," The American Economist, Sage Publications, vol. 55(2), pages 92-103, November.
    2. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    3. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    4. Cohen, Daniel, 1993. "Low Investment and Large LDC Debt in the 1980's," American Economic Review, American Economic Association, vol. 83(3), pages 437-449, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Iamsiraroj, Sasi, 2016. "The foreign direct investment–economic growth nexus," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 116-133.
    2. Rao, B. Bhaskara, 2010. "Estimates of the steady state growth rates for selected Asian countries with an extended Solow model," Economic Modelling, Elsevier, vol. 27(1), pages 46-53, January.
    3. Esa Mangeloja, 2004. "Interrelationship of economic growth and regional religious properties," ERSA conference papers ersa04p94, European Regional Science Association.
    4. Atolia, Manoj & Chatterjee, Santanu & Turnovsky, Stephen J., 2010. "How misleading is linearization? Evaluating the dynamics of the neoclassical growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 34(9), pages 1550-1571, September.
    5. Stefano Bosi & Thierry Laurent, 2008. "Health, Growth and Welfare: Why Put Public Money on Medical R&D?," Documents de recherche 08-18, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    6. Turnovsky, Stephen J, 2004. "The Transitional Dynamics of Fiscal Policy: Long-Run Capital Accumulation and Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(5), pages 883-910, October.
    7. van de Klundert, T.C.M.J. & Smulders, J.A., 1991. "Reconstructing growth theory : A survey," Other publications TiSEM 19355c51-17eb-4d5d-aa66-b, Tilburg University, School of Economics and Management.
    8. Isham, Jonathan & Kaufmann,Daniel, 1995. "The forgotten rationale for policy reform : the productivity of investment projects," Policy Research Working Paper Series 1549, The World Bank.
    9. Aykut Kibritçioglu, 2002. "On the Smithian origins of "new" trade and growth theories," Economics Bulletin, AccessEcon, vol. 2(1), pages 1-15.
    10. Shin-ichi Fukuda & Hideki Toya, 1995. "Conditional Convergence in East Asian Countries: The Role of Exports in Economic Growth," NBER Chapters, in: Growth Theories in Light of the East Asian Experience, pages 247-265, National Bureau of Economic Research, Inc.
    11. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, vol. 40(2), pages 289-329, February.
    12. David, Oladipo Olalekan, 2019. "Nexus between telecommunication infrastructures, economic growth and development in Africa: Panel vector autoregression (P-VAR) analysis," Telecommunications Policy, Elsevier, vol. 43(8), pages 1-1.
    13. Diana Dimitrova, 2018. "The 2018 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 98-152.
    14. B. Bhaskara Rao & Arusha Cooray, 2012. "How useful is growth literature for policies in the developing countries?," Applied Economics, Taylor & Francis Journals, vol. 44(6), pages 671-681, February.
    15. Kwack, Sung Yeung & Lee, Young Sun, 2006. "Analyzing the Korea's growth experience: The application of R&D and human capital based growth models with demography," Journal of Asian Economics, Elsevier, vol. 17(5), pages 818-831, November.
    16. Marco Alfò & Lorenzo Carbonari & Giovanni Trovato, 2020. "On the Effects of Taxation on Growth: an Empirical Assessment," CEIS Research Paper 480, Tor Vergata University, CEIS, revised 08 May 2020.
    17. Stephen Turnovsky, 1999. "Knife-Edge Conditions and the Macroeconomics of Small Open Economies," Working Papers 0031, University of Washington, Department of Economics.
    18. Edgar Morgenroth, 2003. "What should Policy Makers Learn from Recent Advances in Growth Theory and New Economic Geography?," Papers WP150, Economic and Social Research Institute (ESRI).
    19. Camilla Mastromarco & Léopold Simar, 2021. "Latent heterogeneity to evaluate the effect of human capital on world technology frontier," Journal of Productivity Analysis, Springer, vol. 55(2), pages 71-89, April.
    20. Marcos Sanso-Navarro & María Vera-Cabello, 2015. "Non-linearities in regional growth: A non-parametric approach," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 19-38, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bjc:journl:v:8:y:2021:i:3:p:144-154. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Renu Malsaria (email available below). General contact details of provider: https://www.rsisinternational.org/journals/ijrsi/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.