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The Determinants of External debt in Sub Saharan Africa


  • Adonia Chiminya

    (School of Economics, University of Cape Town)

  • J. Paul Dunne

    (School of Economics, University of Cape Town)

  • Eftychia Nikolaidou

    (School of Economics, University of Cape Town)


Determining the factors that influence external indebtedness in developing countries became an important focus for research following the damaging external debt crises of the early 1970s. While the resulting research has provided valuable insights, there has been a tendency to rely solely on economic factors and surprisingly little concern has been given to political factors that may be important determinants of debt. This paper investigates the main contributing factors to debt accumulation using panel data methods and focusing on a group of 36 Sub Saharan Africa countries (SSA) over the period 1975 to 2012. Instead of relying only on economic variables, the paper introduces a number of political variables that are found to be important and show the need to nuance the economic arguments. Democratically administered governments in the region are found to accumulate more debt than autocratic ones and parliamentary systems seem to accumulate more debt than presidential democracies. Furthermore, countries with a constrained executive and countries with more open and competitive electoral systems tend to lead to the accumulation of less debt. Finally, countries that received debt relief seem to accumulate less debt relative to those that did not while economic activity and openness are important in reducing debt in the region.

Suggested Citation

  • Adonia Chiminya & J. Paul Dunne & Eftychia Nikolaidou, 2018. "The Determinants of External debt in Sub Saharan Africa," School of Economics Macroeconomic Discussion Paper Series 2018-02, School of Economics, University of Cape Town.
  • Handle: RePEc:ctn:dpaper:2018-02

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