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Primary Commodity Dependence And Debt Problem In Less Developed Countries


  • SWARAY, Raymond B.


Economists have proffered myriads of causes of the debt problem faced by less developed countries (LDCs). This paper uses the panel data technique to investigate the fundamental causes of the debt problem among primary commodity dependent LDCs. The results show a strong link between high levels of indebtedness and unfavourable terms of trade among commodity-dependent countries. Further results show that the degree of openness of the LDC’s economy also has a significant influence on its external debt level.

Suggested Citation

  • SWARAY, Raymond B., 2005. "Primary Commodity Dependence And Debt Problem In Less Developed Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 5(4).
  • Handle: RePEc:eaa:aeinde:v:5:y:2005i:4_8

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    References listed on IDEAS

    1. Eaton, Jonathan, 1987. "Public Debt Guarantees and Private Capital Flight," World Bank Economic Review, World Bank Group, vol. 1(3), pages 377-395, May.
    2. Krueger, Anne O, 1987. "Debt, Capital Flows, and LDC Growth," American Economic Review, American Economic Association, vol. 77(2), pages 159-164, May.
    3. Paul Cashin & Hong Liang & C. John McDermott, 2000. "How Persistent Are Shocks to World Commodity Prices?," IMF Staff Papers, Palgrave Macmillan, vol. 47(2), pages 1-2.
    4. Alberto Alesina & Nouriel Roubini, 1992. "Political Cycles in OECD Economies," Review of Economic Studies, Oxford University Press, vol. 59(4), pages 663-688.
    5. Claessens, Stijn & Qian, Ying, 1991. "Risk management in sub-Saharan Africa," Policy Research Working Paper Series 593, The World Bank.
    6. Rogoff, Kenneth, 1990. "Symposium on New Institutions for Developing Country Debt," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 3-6, Winter.
    7. Paul, Samuel & Mote, Vasant L, 1970. "Competitiveness of Exports: A Micro-level Approach," Economic Journal, Royal Economic Society, vol. 80(323), pages 895-909, December.
    8. Borensztein, Eduardo, 1990. "Debt overhang, credit rationing and investment," Journal of Development Economics, Elsevier, vol. 32(2), pages 315-335, April.
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