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Can Debt Relief Buy Growth?

  • Ralf Hepp

    (University of California, Davis)

The purpose of the paper is twofold. First, I investigate whether numerous debt initiatives during the 1980s and 1990s have had a significant effect on economic growth rates in developing countries in general. The major initiatives during that time period were negotiated as bilateral agreements under the guidance of the Paris Club of Creditors. These agreements were complemented later on by the Heavily Indebted Poor Countries (HIPC) debt relief initiative in 1996 and its “enhanced” version in 1999. I find that, on average, debt relief has no effect on growth rates of developing countries. The second question I address in this paper is whether the effect on growth rates was different for different subsets of developing countries. I find that countries that are not classified as HIPC have benefited significantly from debt relief, whereas the growth rates of HIPC countries have been unaffected.

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Paper provided by EconWPA in its series International Finance with number 0510003.

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Length: 35 pages
Date of creation: 04 Oct 2005
Date of revision:
Handle: RePEc:wpa:wuwpif:0510003
Note: Type of Document - pdf; pages: 35
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