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Growth and external debt: a new perspective on the african and latin american tragedies

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  • Cohen, Daniel

Abstract

This paper addresses two puzzles of the growth literature: the failure of standard growth equations to account for slow growth in Latin America and Africa; and the surprising failure of trade to explain growth when trade liberalization appears to play a significant role. The paper shows that: i) African growth is readily explained by macroeconomic mismanagement and low investment; ii) trade liberalization should be taken as a proxy for good ‘macroeconomic’ management rather than a genuine measure of the effect of trade upon growth; and iii) poor growth in Latin America (which does not seem to be explained by the preceding feature) is explained well by a variable (constructed in the text) representing the likelihood of debt crisis.
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Suggested Citation

  • Cohen, Daniel, 1997. "Growth and external debt: a new perspective on the african and latin american tragedies," CEPREMAP Working Papers (Couverture Orange) 9715, CEPREMAP.
  • Handle: RePEc:cpm:cepmap:9715
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    Citations

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    Cited by:

    1. Helene Poirson Ward & Luca A Ricci & Catherine A Pattillo, 2004. "What Are the Channels Through Which External Debt Affects Growth?," IMF Working Papers 04/15, International Monetary Fund.
    2. Rolf Maier, 2005. "External Debt and Pro-Poor Growth," Macroeconomics 0504031, EconWPA.
    3. repec:eee:ecosys:v:41:y:2017:i:3:p:408-419 is not listed on IDEAS
    4. M. Wasiqur Rahman Khan & Haydory Akbar Ahmed, 2012. "Dynamics of foreign earnings, assistance and debt servicing in Bangladesh," International Journal of Development Issues, Emerald Group Publishing, vol. 11(1), pages 74-84, April.
    5. Petia Topalova & Dan Nyberg, 2010. "What Level of Public Debt Could India Target?," IMF Working Papers 10/7, International Monetary Fund.
    6. repec:eee:streco:v:41:y:2017:i:c:p:29-42 is not listed on IDEAS
    7. Joshua C. Hall & Serkan Karadas & Minh Tam T. Schlosky, 2016. "Is There Moral Hazard in the Heavily Indebted Poor Countries (HIPC) Initiative Debt Relief Process?," Working Papers 16-24, Department of Economics, West Virginia University.
    8. Gul, Adnan, 2008. "Pakistan’s Public Debt: The shocks and aftershocks," MPRA Paper 11427, University Library of Munich, Germany.
    9. Schclarek, Alfredo, 2004. "Debt and Economic Growth in Developing and Industrial Countries," Working Papers 2005:34, Lund University, Department of Economics.
    10. Hemantha Kumara & Nawalage S. Cooray, 2013. "Public Debt and Economic Growth in Sri Lanka: Is There Any Threshold Level for Pubic Debt?," Working Papers EMS_2013_22, Research Institute, International University of Japan.
    11. Mariam Camarero & Jesús Peiró-Palomino & Cecilio Tamarit, 2017. "External imbalances and growth," Working Papers 2017/02, Economics Department, Universitat Jaume I, Castellón (Spain).
    12. Doğan, İbrahim & Bilgili, Faik, 2014. "The non-linear impact of high and growing government external debt on economic growth: A Markov Regime-switching approach," Economic Modelling, Elsevier, vol. 39(C), pages 213-220.
    13. Jeronimo Zettelmeyer, 2006. "Growth and Reforms in Latin America; A Survey of Facts and Arguments," IMF Working Papers 06/210, International Monetary Fund.
    14. Gul, Adnan, 2008. "Is external debt an effective way of bringing economic reforms?," MPRA Paper 10979, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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