On measuring indebtedness of African countries: A stochastic frontier debt production function

Guy Blaise Nkamleu

MPRA Paper from University Library of Munich, Germany

Abstract: At least since the early 1990s, the problem of Africa’s debt was a recurring theme in the development debate and many suggestions for debt relief have now been implemented. However, a thorough solution is hampered by the existence of multiple ways of scaling debt. This paper provides a framework for comprehensively measuring indebtedness and gives therefore a basis for setting objective principles for debt reduction measures. The paper uses a stochastic frontier production function approach and the technical efficiency computation procedure to develop an indebtedness index for 46 African countries. The results indicate an indebtedness index across countries ranging from a minimum of 3.6 (South-Africa) to a maximum of 92 (Zambia), with an average of 69. Countries, which have experienced extended civil wars, are generally less indebted, while countries with more corrupt governments have generally contracted more multilateral debt. The paper ends by raising a number of implications for a better approach of debt management in Africa.

Keywords: External debt; Stochastic frontier; Indebtedness index; Institutions; African countries (search for similar items in EconPapers)
JEL-codes: F34 O43 O57 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (2)

Published in Economic Research Working Paper Series, African Development Bank 85 (2006): pp. 1-21

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14661

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