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Effect of external debt on the level of infrastructure in Africa

Arsène Aurelien Njamen Kengdo (), Tii Nchofoung () and Philemon Bonaventure Ntang ()
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Arsène Aurelien Njamen Kengdo: Faculty of Economics and Management, University of Dschang, Cameroon
Philemon Bonaventure Ntang: Faculty of Economics and Management, University of Maroua, Cameroon

Economics Bulletin, 2020, vol. 40, issue 4, 3349-3366

Abstract: The main objective of this paper is to analyse the effect of external debt on infrastructure development in Africa over the 2003-2018 periods. It employs a fixed-effects Driscoll and Kraay's estimator and the Lewbel's estimator after second-generation unit roots test. The estimations establish that the effect of external debt on the level of infrastructure in Africa is negative, but for a sustainable level of debt around 99%, the positive impact of the debt on infrastructure is observed. Similar results were obtained when Transport index, electricity index and water and sanitation index are used as the dependent variable, while the effect of external debt is positive when mobile cellular per habitant and ICT index are used as the dependent variables. These results imply that public policies for improving infrastructure investment and assuring sustainable debt should be promoted.

Keywords: External debt; infrastructure; Generalized Method of Moments; Threshold (search for similar items in EconPapers)
JEL-codes: H5 H6 (search for similar items in EconPapers)
Date: 2020-12-31
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