IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

The Impact Of Democracy And Corruption On The Debt-Growth Relationship In Developing Countries

  • JOAO TOVAR JALLES

    ()

    (University of Cambridge)

The quality of governance, and in particular of the control of corruption and the level of democracy, is tested as a factor influencing the relationship between external debt (borrowing opportunities/constraints) and economic growth in a panel of 72 developing countries over the 1970-2005 period. Countries with lower corruption seem to be able to use and manage their debt better. Moreover, in countries with lower levels of corruption both the positive and negative effects of debt on growth, modelled with non-linear specifications, are significant. Furthermore, evidence cannot support a clear Debt-Laffer curve in our sample. The level of debt at which the effect of debt on growth becomes negative is also higher in countries with lower corruption levels. Finally, panel Granger-causality tests only weakly support the claim that causality runs from debt/institutional quality to growth. Despite our somewhat ambiguous results we conjecture some policy implications within the HIPC initiative and donor¡¯s approach to governance issues.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.jed.or.kr/full-text/36-4/3.pdf
Download Restriction: no

Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

Volume (Year): 36 (2011)
Issue (Month): 4 (December)
Pages: 41-72

as
in new window

Handle: RePEc:jed:journl:v:36:y:2011:i:4:p:41-72
Contact details of provider: Web page: http://www.jed.or.kr/

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Adeel Malik & Jonathan R.W. Temple, 2005. "The Geography of Output Volatility," Economics Series Working Papers WPS/2005-07, University of Oxford, Department of Economics.
  2. Durlauf, Steven N. & Kourtellos, Andros & Minkin, Artur, 2001. "The local Solow growth model," European Economic Review, Elsevier, vol. 45(4-6), pages 928-940, May.
  3. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, vol. 1(3), pages 363-89, September.
  4. Louis Putterman & Valerie Bockstette, 2000. "States and Markets:the Advantage of an Early Start," Working Papers 2000-12, Brown University, Department of Economics.
  5. Mendez, Fabio & Sepulveda, Facundo, 2006. "Corruption, growth and political regimes: Cross country evidence," European Journal of Political Economy, Elsevier, vol. 22(1), pages 82-98, March.
  6. G. Kapetanios & M. Hashem Pesaran & T. Yamagata, 2010. "Panels with nonstationary multifactor error structures," Post-Print hal-00768190, HAL.
  7. Catherine Pattillo & Hélène Poirson & Luca Antonio Ricci, 2011. "External Debt and Growth," Review of Economics and Institutions, Università di Perugia, vol. 2(3).
  8. A. Chong & C. Calderón, 2000. "Causality and Feedback Between Institutional Measures and Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 69-81, 03.
  9. Kao, Chihwa, 1999. "Spurious regression and residual-based tests for cointegration in panel data," Journal of Econometrics, Elsevier, vol. 90(1), pages 1-44, May.
  10. M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
  11. Yudon, Y. & Weeks, M., 2000. "Provincial Income Convergence in China, 1953-1997: a Panel Data Approach," Cambridge Working Papers in Economics 0010, Faculty of Economics, University of Cambridge.
  12. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  13. Deshpande, Ashwini, 1997. "The debt overhang and the disincentive to invest," Journal of Development Economics, Elsevier, vol. 52(1), pages 169-187, February.
  14. Ciocchini, Francisco & Durbin, Erik & Ng, David T.C., 2003. "Does Corruption Increase Emerging Market Bond Spreads?," Working Papers 127179, Cornell University, Department of Applied Economics and Management.
  15. repec:ner:tilbur:urn:nbn:nl:ui:12-3125517 is not listed on IDEAS
  16. Jinyoung Hwang, 2002. "A Note On The Relationship Between Corruption And Government Revenue," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 27(2), pages 161-177, December.
  17. Joao Tovar Jalles, 2010. "Does democracy foster or hinder growth? Extreme-type political regimes in a large panel," Economics Bulletin, AccessEcon, vol. 30(2), pages 1359-1372.
  18. Chowdhury, Abdur R., 2001. "External Debt and Growth in Developing Countries: A Sensitivity and Causal Analysis," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  19. Olson, Mancur, Jr & Sarna, Naveen & Swamy, Anand V, 2000. " Governance and Growth: A Simple Hypothesis Explaining Cross-Country Differences in Productivity Growth," Public Choice, Springer, vol. 102(3-4), pages 341-64, March.
  20. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
  21. Bowsher, Clive G., 2002. "On testing overidentifying restrictions in dynamic panel data models," Economics Letters, Elsevier, vol. 77(2), pages 211-220, October.
  22. Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:jed:journl:v:36:y:2011:i:4:p:41-72. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Changhui Kang)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.